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

To: John Hull who wrote (144703)	10/4/2001 4:21:03 PM
From: Road Walker	Read Replies (1) \| Respond to of 186894

John, Thought you might be interested in the following: Thursday October 4, 12:17 pm Eastern Time BusinessWeek Online DAILY BRIEFING -- Should Intel Stick to its Day Job? DAILY BRIEFING By David Henry in New York When Intel Corp. announces third-quarter earnings on Oct. 16, losses on its venture-capital investments are likely to take a big bite from its bottom line. Over the past 10 years, Intel has pocketed net gains of $4 billion from the portfolio run by its Intel Capital unit, which invested in the likes of BlackBerry pager maker Research In Motion, Red Hat Software, and incubator CMGI. But shortly before the September 11 terrorist attack, Intel warned that VC losses were mounting and would exceed interest income in the third quarter. The losses, the first since the chipmaker began disclosing VC results in the fall of 1999, could well drain $200 million from the parent's pretax operating income. ADVERTISEMENT Even for the tech giant, that's a serious hit. It's about as much as all the operating income Intel reported under generally accepted accounting principles for the second quarter and about one-fifth of such income calculated under the pro forma accounting the company prefers. And it's a reversal from the $716 million profits the unit contributed during the same quarter a year ago, as well as a huge comedown from the heyday of the tech bubble in 2000, when the unit had a record $2.1 billion windfall. Worse may come. Intel's VC portfolio is valued on its balance sheet at $2.7 billion, as of June 30. Just a small portion of that, $726 million, is in quoted securities, which may be revalued at market prices each quarter. The other $2 billion is investments in private companies, mostly still carried at their original cost. That private pool could turn into an ocean of red ink if sales by Intel or others set a lower reference price for the companies. Faced with such prospects, most companies would quit VC. Already, many have: VC investments by corporations fell 90% in the first half of 2001, to $353 million, says PricewaterhouseCoopers. Not Intel. Leslie L. Vadasz, president of Intel Capital, says Intel is trying to keep up the pace of its venture investments. But try as he might, he's not finding opportunities to invest even half the amount he did last year -- $1.3 billion in 300 deals. The big problem: VC firms are offering few new deals to Intel. They're too busy with problems among their portfolio companies. STRATEGIC MOTIVE. Intel can plow on regardless because it's not in VC primarily to make money. When it began to invest a decade ago, it was looking for companies that were developing products that could help it with design and manufacturing. By the late 1990s, Vadasz was putting money into everything from PC and server manufacturers to the Internet portals -- companies that could fan demand for products and services using Intel chips. ``This was, is, and continues to be a strategic program,'' says Vadasz. Intel's own assessments of its investments differ from conventional VCs. Consider the now-defunct eToys. Although the e-tailer collapsed, Intel cites it as a successful venture because its dynamic Web site encouraged others to improve their sites and increase demand for computing. Intel nearly tripled its $4 million investment in eToys by selling part of its holdings before the company failed. Profits from the deal were a fraction of the $1 billion it made from Micron Technology Inc. But to Intel's thinking, Micron was a strategic flop because it didn't advance the production of random access memory as Intel had wanted. With the tech sector depressed, Intel may now have to curb its appetite for VC investments. Although the stock market might accept a few down quarters in VC results, its patience is unlikely to be unlimited. Go to www.businessweek.com to see all of our latest stories.

To: John Hull who wrote (144703)	10/5/2001 7:42:37 AM
From: Amy J	Respond to of 186894

John, RE: "Amy,so was this the company you work for that you didn't want to tell me the name of?jh" No, I'm not involved in Tropian. Regarding name of our startup, it is correct that I had replied in a personal mail to you that I had some concerns over mixing my SI hobby with business. I do not want my name or my company's name known. In an earlier mail I had asked if you would keep it confidential but you did not answer that particular item, so I didn't share. If you had provided an answer and were persistent, I probably would have followed up. Though my last mail indicated a core issue, which is that the chip you are in charge of does not have the drivers nor the necessary speed required. We can develop the drivers you lack, but the speed isn't there, so how can we sell it? I have to generate revenue today. I had to make the decision to build something that we could sell today. My hands are tied. We wouldn't be in business today if I had made a different decision back in March. We have customer checks in my hand today that are supporting us through thick and thin. Would Intel, during a phase of cost-cutting, hold us up while we develop drivers for Intel and wait for the chip's speed to increase? Who would pay the bills for one or two years? What if the chip is late? What if the speed turns out not to be fast enough? Any of this, would have killed our startup. That's why my last mail suggested the better route was a pure contract for drivers. With a contract, I can justify putting headcount on a project, because that doesn't negatively impact our main product which is our startup's bread-and-butter and our survival. My hands are tied. If you can think of a way around this, I'm certainly open. But through mail, not through a public forum. Regards, Amy J