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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (140856)	8/4/2001 3:38:27 PM
From: Elmer	Respond to of 186894

Andy Grove, Intel chairman, always a blunt speaker, was in top form. "We've had a helluva year. The good news is that it's over. The bad news is that the next year isn't likely to be any better." Grove spoke this week to 148 top executives of companies in which Intel has invested, at the second annual Intel Capital CEO Summit. The executives traveled from 24 countries to San Francisco to hear Grove, other Intel leaders, and industry experts present on topics ranging from Surviving in Tough Times to Public Relations Strategies and Designing an Adaptive Organization. Les Vadasz, Intel executive vice president and president, Intel Capital, warmly welcomed the attendees with the message, "We've invested in your future because with your success we will have business success as well." Exploring the theme of ?Internet, Interrupted? in his keynote address, Grove compared the Internet build-out with historical infrastructure build-outs such as the canals built in the early 19th century and the railroads constructed in the second half of the 19th century. Grove noted that the same pattern was repeated each time: early hype followed by massive investments in infrastructure with expectations of quick returns. The profits were inevitably delayed, leading to overbuilding and financial distress. "We've seen a massive over-funding of Internet infrastructure. This was fueled by easy access to capital-especially venture capital and debt-and high expectations. This has led to a mismatch of infrastructure with demand." Grove used the wireless market segment as an example of the mismatch. "Every year between 1997 and 2000 the forecast for handset sales increased. We cranked up capacity to meet demand. Then in 2001 the forecast dropped by half. The growth rates are still good, but this is a very ineffective way to run an industry." At one point Grove used a humorous story to illustrate his idea: "Late one night a policeman saw a drunk man wandering around under a streetlight. The policeman asked him what he was doing. The drunk said he lost his watch on the other side of the street and he was trying to find it. When the policeman asked him why he wasn't looking on the other side of the street, the drunk said the light was better on this side." Grove related this to the current situation around the Internet. "The build-out has happened where the light is-where it's easy-but not where it is really needed. We?ve made massive investments in long-haul fiber-most of which is still dark-but we have to focus on getting broadband to the home and small business.? Grove said the key to getting out of the current malaise is to "catch the next wave." The wave in wireless is data; in networking, it is to get Ethernet "out of the box and onto the network;" and in optics, it is to get it "out of the network and onto the box." Grove concluded his talk by emphasizing that while the Internet has been interrupted, it is really "Internet, continued." Here are some highlights from the Grove question-and-answer session: Q: How far are we from the end of Moore's Law? A: About another decade. But it won't be a hard wall-we will start to hit economic barriers before we are stopped dead. New technologies such as extreme ultraviolet (EUV) are crucial for getting us there, but will take massive investments. Q: What is your advice on how private companies can survive the next 12-18 months? A: You can't save your way out of the current dilemma. However, you do need to use your cash wisely. My recommendation would be to hunker down on massive sales and marketing expenses, improve your technology, and be ready to build your sales when your customers are again ready to buy. Q: What is your prediction for broadband penetration into U.S. homes? A: We have a LONG way to go. To date, there have been very few efforts to bring fiber optics to the home. If you just look at all the 100Mb+ connections to the home (cable, DSL, etc.), the U.S. should reach only 25 percent penetration by 2006. This is abysmal when compared to countries like Korea, which already has more than 30 percent broadband penetration.