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

To: Paul Engel who wrote (55218)	5/7/1998 1:27:00 AM
From: Ian Davidson	Read Replies (1) \| Respond to of 186894

Paul Who is Drudge?? I never heard of the guy so I went looking. dynamic.webpoint.com Doesn't sound too terrific. Sure hope he's wrong.....again. Ian

To: Paul Engel who wrote (55218)	5/8/1998 9:24:00 AM
From: Larry Loeb	Read Replies (2) \| Respond to of 186894

All, Here is the text of the article relating to INTC from today's Business Week: YOU'RE THE NEXT TARGET, INTEL When Intel CEO Andrew S. Grove hands over the reins to Craig R. Barrett in May, he may pass on something Intel had hoped to avoid: a federal antitrust action. BUSINESS WEEK has learned that as early as June, Federal Trade Commission staffers are aiming to present to the commissioners a proposed action charging Intel Corp. with illegally using monopoly power to harm rivals and punish customers who cross the chip giant. The agency is also probing whether Intel unlawfully uses its chip dominance to muscle into new markets--an inquiry that could result in a separate action further down the road. The Intel inquiry has many parallels to the Justice Dept.'s case against Microsoft Corp., the other half of the ''Wintel'' duopoly that dominates computerdom. As in the Microsoft case, there will most likely be a quick surgical strike to halt anticompetitive behavior. Meanwhile, investigators probably will pursue a wide-ranging probe of alleged monopoly abuses. ''You need to streamline. Otherwise you're heading off into a Vietnam,'' says Stephen Calkins, a former FTC general counsel who teaches at Wayne State University law school. Intel won't comment on the potential case. But the investigation differs in one major way from the Microsoft probe: The FTC isn't under the deadline that the launch of Windows 98 placed on Justice. So FTC lawyers are taking their time to ensure they have enough evidence to build a strong case. Sources familiar with the FTC's investigation say it is initially zeroing in on charges that Intel retaliated against two customers that sued the company in patent disputes. After the companies--Digital Equipment Corp. and Intergraph Corp.--filed separate suits, Intel cut off chip supplies and technical information. That didn't sit well with U.S. District Judge Edwin L. Nelson, who on Apr. 10 slapped an injunction on Intel to stop such behavior toward Intergraph. Industry executives say the FTC probe is looking at how Intel uses such intellectual-property ''blackmail'' to keep customers in line. PRIX FIXE? The FTC also is sifting through complaints that Intel discourages computer makers who buy processors from rivals. The company's most obvious weapon here is the famous Intel Inside marketing program. The chipmaker paid out an estimated $1 billion in rebates last year to PC companies that use Intel chips exclusively. Rivals call this practice exclusive dealing and charge that it freezes out competitive products and allows price-fixing. Industry execs who have worked with the FTC say it is also taking a careful look at Intel's growing control over the basic design of PCs. Parts of the PC that used to be based on ''open'' standards are increasingly getting superceded by Intel technologies, which the chipmaker usually has licensed for free to all comers. But details about the latest innovation, the patented connector used in the Pentium II, are being kept secret. That could shut out rivals like Advanced Micro Devices Inc. and National Semiconductor Corp. if, as expected, motherboards designed for Pentium IIs become ubiquitous in PCs. Another FTC concern: efforts by Intel to leverage its processor monopoly into other chip markets. Intel's share in chipsets--the companion chips that work with the microprocessor--shot from 8% in 1993 to more than 75% last year, while rivals such as VLSI Technology Inc. were driven out. Now, Intel is moving into graphics and networking chips. Industry execs says Intel can force PC makers to buy these other chips by bundling them with processors on Intel motherboards. The FTC might label that monopoly leveraging. If the FTC decides to go ahead and pursue Intel, how will it fare? The agency isn't pushing any far-out legal principles, and it has had a good track record lately with actions such as its blocking of the Staples-Office Depot merger. Indeed, competitors claim its case may be stronger than Justice's Microsoft action. That's not exactly the sort of kickoff that Intel's Barrett was anticipating. By Andy Reinhardt in New York and Susan B. Garland in Washington

To: Paul Engel who wrote (55218)	5/8/1998 9:26:00 AM
From: Larry Loeb	Respond to of 186894

And, from the San Jose Mercury News: Posted at 8:44 p.m. PDT Thursday, May 7, 1998 Intel aims to head off the FTC BY TOM QUINLAN Mercury News Staff Writer Intel Corp., convinced that federal regulators are nearing an action against it, is considering softening some of its most aggressive business practices in hopes of staving off legal trouble, sources close to the company said. As part of a broader probe of the Santa Clara chip giant, the Federal Trade Commission has focused in recent months on Intel's efforts to retrieve or withhold engineering information regarding its chips from companies with which it has disputes. Losing this information could devastate a computer manufacturer, because there is no practical alternative to Intel microprocessors in many parts of the desktop computing market. According to sources familiar with the FTC's probe, the government is now leaning toward taking a separate action against this practice soon, believing that current antitrust law clearly prohibits such behavior by a dominant supplier. Meanwhile, regulators will continue to pursue a more thorough investigation of the company's overall competitive behavior. And if the FTC proceeds, company sources said, Intel is ready to change its behavior in some as yet unspecified way, so long it doesn't regard the government's charges as too broad. Such a concession might surprise its critics, but would be in keeping with Intel's consistently pragmatic style. ''This is not something Intel considers absolutely crucial to its future strategy,'' one source said. ''If it doesn't go too far, Intel is probably willing to work with the FTC on changing the way it does business.'' The business practice at issue is one for which Intel has been widely criticized throughout the industry. Usually, that criticism comes in private conversation, but it recently spilled into the open in two separate lawsuits, filed by Digital Equipment Corp. of Maynard, Mass., and Intergraph Computer Corp. of Huntsville, Ala. Cases similar In each case, Intel sought to retrieve semiconductor engineering information -- known as yellow or gold books in the industry -- and threatened to withhold its chips after the computer company filed a patent infringement suit against it. Neither company complied with Intel's request, and succeeding developments made Intel's actions moot -- the Digital suit was settled out of court, and Intergraph was granted a preliminary injunction affirming its right to the information. But both companies claimed in court filings that Intel's demands would seriously damage their ability to do business. And Intergraph executives say today that they suffered actual harm before the preliminary injunction was granted. Intergraph, they say, fell months behind its competitors in the market for the high-powered desktop computers called workstations, because Intel had stopped sending it the latest information on its newest processors. Computer manufacturers use this advance information to design systems that can be ready to sell as soon as Intel ships its chips. In neither the Intergraph nor the Digital disputes did Intel shut off chip shipments. Intel's handing of the gold book information is the FTC's near-term focus. As part of that probe, the agency's investigative staff is also expected to recommend that the government restrict Intel's increasing use of three way non-disclosure agreements. Under some circumstances, these agreements forbid companies that receive technical information or specifications from Intel to do business with other companies that don't have an ongoing working relationship with Intel. Board OK needed Any recommendation made by the FTC's investigative staff would have to be approved by the agency's five-member board of Commissioners before a legal complaint is filed. Intel is anxious to keep the current dispute from reaching that point, insiders say. But industry observers noted that if the government seeks to push Intel too far, the company may feel it has no choice but to fight. For instance, Intel might be willing to be more selective in withholding information from companies that depend upon it. But it is unlikely to agree to provide all of its technical information to any company that wants it. First blood In the past Intel has defended the practice of withholding engineering information as the only logical step it can take when threatened with a lawsuit that questions the validity of Intel's chip designs. ''We didn't start this,'' Thomas Dunlap, Intel corporate vice president and general counsel said in a recent interview. ''They sued us over microprocessor (patents) and then they want our trade secrets on microprocessors. (Giving it to them) doesn't seem to make good sense.'' But Intel's overwhelming dominance of the microprocessor market -- an estimated 85 percent of the total microprocessor market, and more for higher performance processors -- makes it mandatory that Intel operate under a higher standard, industry critics say. Even if Intel can reach agreement with the FTC in this case -- an agreement that would likely be formalized in the form of a consent decree that would spell what Intel could do in such situations -- the FTC's interest in Intel will almost certainly continue. Its ongoing investigation, which could take another year to complete, is focusing on Intel's growing presence in parts of the PC industry beyond microprocessors, sources familiar with the investigation said. That includes the possibility that Intel is using its market dominance to push into areas such as networking, graphics, chip sets -- which enable the microprocessor to communicate with other components -- and the motherboards that are used to integrate the various pieces of a computer into an integrated whole. But sources familiar with Intel's business practices believe that those areas will be more difficult for the government to deal with than the gold books. However, the government might try to establish a new antitrust theory based on the idea that Intel's dominance of the processor market is a ''bottleneck'' that prevents or limits innovation by other companies.