Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Rossignol who wrote (92203)	7/19/2001 2:48:41 PM
From: Rossignol	Respond to of 97611

Let me correct myself - I'll be happy to see if it just stays positive.

To: Rossignol who wrote (92203)	7/19/2001 7:32:27 PM
From: Night Writer	Respond to of 97611

Compaq Changes Approach, Axes Venture Capital Investment Team Jul 19, 2001 (Houston Chronicle - Knight Ridder/Tribune Business News via COMTEX) -- Compaq Computer Corp. has disbanded the team responsible for making venture capital investments in small technology companies, moving those responsibilities into the different business units of the company. The company laid off 10 of the 15 employees in the corporate development office, who oversaw more than $500 million invested in 60 different companies in 2000. The remaining employees will take other positions where they will still help the company identify potential investments. "This move ultimately is going back to the model we had for investing in the mid-1990s, where the different business units were responsible for finding opportunities," Compaq spokesman Steve Sievert said. "It's like passing the baton back." Compaq will continue to put money in startups with a goal of getting access to technology and gaining a first-mover advantage, he said, but it's unlikely the company will invest $500 million again. "We may do the same number of deals, but given the marketplace, we don't anticipate reaching the same dollar level in investments this year," he said. Compaq is not alone in easing back on its venture investing activities, said Kirk Walden, national director of venture capital investing for PricewaterhouseCoopers. Corporations such as Compaq, Intel, Cisco Systems and Dell Computer invested heavily in tech startups throughout the late 1990s, but with the Internet economy's troubles, activity has dropped off dramatically. The largest single corporate venture investor, chip maker Intel, made 163 investments in 2000, but is way off that pace this year with only 19 investments in the first quarter of 2001. Cisco only did seven investments in the first quarter, off pace from the 45 investments in 2000, while Dell Ventures, the investment arm of Dell Computer Corp., made 42 investments in 2000 but only five in the first quarter of 2001. "A slowdown in the technology markets tends to cause corporate investors to pull out more quickly than traditional VC firms," Walden said. "Corporations have various alternatives on what they can do with that cash, like let it go straight to the bottom line, while VC firms just exist to invest." Companies have also seen the value of their investment portfolios drop sharply. Compaq does not share much of its investment information, but in January reported a $1.8 billion non-cash charge related to the declining value of its stake in Internet holding company CMGI. It has continued to divest itself of certain tech stock assets, including selling more than $16 million in its shares in CMGI, search engine AskJeeves.com and Internet Service provider NetZero in the past few months. When Dell reported earnings for 2000 it said its investment portfolio value had been cut nearly in half to about $1 billion. On Tuesday when Intel reported its quarterly financials it said it lost $100 million on its equity investments. Compaq has always invested primarily for strategic purposes, seeking companies with technology that Compaq wanted to use or in companies that could be potential customers. Intel and Dell make strategic investments, too, but are more likely to invest based on potential returns, Walden said. "There's an agreement behind every deal that spells out how we can take the technology of that startup and incorporate it into products," Sievert said. Compaq's investment in Austin-based Lane15 Software, which develops a new standard for transferring data between servers, was intended to give Compaq access to that technology for its own customers. When the company set aside $100 million to invest in young biotech companies last year, it was motivated in part by the potential of those companies to become customers for Compaq's most powerful supercomputers. By Tom Fowler To see more of the Houston Chronicle, or to subscribe to the newspaper, go to h tp://www.chron.com (c) 2001, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News