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

To: GVTucker who wrote (142480)	8/30/2001 1:43:54 PM
From: Gary Ng	Respond to of 186894

GV, Re: In the specific instance of Intel, I don't see where the synergies are all that great when it comes to venture capital or communications I can understand the rationale behind Intel's move in communication as Intel's strength is in semi-conductors and there could be synergy by appling this in the communication sector(after all they are all silicons) and it seems that Xscale is on the right track. However, I am in general agree with you that they better not to diversify into area not related to their core business like oil :-) gary

To: GVTucker who wrote (142480)	8/30/2001 2:31:43 PM
From: Mary Cluney	Read Replies (3) \| Respond to of 186894

GVTucker, <<<Granted, a lot of times there are synergies that can be obtained when a company enters a business that is related to their existing core. In the end, though, synergies are usually overstated. >>> We once had a Defense Secretary, a former Chairman of General Motors, who was quoted as saying what is good for General Motors is good for the USA. In a similar way, Craig Barrett is now saying what is good for computing is good for Intel. It's a vision thing. Normally, people who study engineering and or finance are lousy at the vision thing. Bean counters are the worst in this regard. You don't want any bean counter (or people who have anything to do with finance) get near the vision thing. They have strong opinions and they are almost always wrong. A company without vision (the way most finance people would have it) is a company that is going to die anyway and only the liquidators are going to make out (I guess that is why finance people like it that way). IMO Craig Barrett has a shot at reinventing Intel. If Intel is to survive, as any company that is going to survive, has to constantly reinvents itself. Mary

To: GVTucker who wrote (142480)	8/30/2001 2:35:43 PM
From: Dave B	Respond to of 186894

GV< Everything else being equal, I would rather that the companies that I invest in not be diversified. It isn't as if I want increased risk. But I can diversify my portfolio myself. There is no advantage to lowering the risk of my overall portfolio if one of the companies that I choose diversifies; if I want more diversification, I'll do that, with more of an eye toward what makes sense for me. You're too sophisticated. <G> From a business perspective, you identified at least one reason to diversify -- synergies between product families. If you can leverage the sales, production, and distribution channels to reduce your costs (through "sharing" over the competition, you can compete more effectively. Maybe the benefit is overstated, but at a micro level, would you argue that Microsoft doesn't get any benefit from selling a spreadsheet product and a word processor? The costs certainly aren't doubled. Obviously this is an extreme example, but it points out that the question isn't whether or not, but how much. At a broader level is the opportunity cost of the in-house capital. Intel had a bunch of extra cash laying around (figuratively speaking, of course) from their success in the processor market. They (hopefully) performed an anylsis that went something like "yeah, we could dump billions more into the processor business and grow our market share from 80% to 82%, or we could leverage those billions into markets that are growing rapidly and that we expect to be large in the future, and grow our market share from 0% to 50%+. Sometimes you're right, and sometimes you're wrong on these judgments (certainly the $500M they "invested" in Micron provided a durned good return. <G>). But at least it's potentially a better use of capital. Hopefully, they'll continue to perform these analyses to verify their previous guesses (maybe they were wrong, or maybe the market still hasn't developed enough to make the businesses profitable). But the thing that's going to provide the best value to the shareholders is putting their money to use in the most effective manner possible. Dave