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

To: L. Adam Latham who wrote (75443)	3/4/1999 11:19:00 PM
From: peter a. pedroli	Respond to of 186894

i moved into inph last week after selling seeq same sector with just 2.4mil. share float and a line of ATM and Fiber Channel products. made $.48/share in 98 with very close ties with IBM. INTC buys LEVL for $2.2 billion Thursday March 4 8:12 PM ET Intel To Buy Level One For $2.2 Bln By Therese Poletti SAN FRANCISCO (Reuters) - Intel Corp. (Nasdaq:INTC - news) said Thursday it agreed to acquire networking chip maker Level One Communications Inc. (Nasdaq:LEVL - news) for $2.2 billion in stock in a move to expand its fast-growing networking business. The acquisition marks Intel's largest in a string of recent deals focused on its networking business, which provides networking cards, motherboards and other equipment for homes and small to medium-sized businesses. It also sells fast networking cards to large corporations. Intel said it would pay Level One stockholders 0.43 shares of Intel stock for each share of Level One held. Based on Intel's closing stock price of $113.37, the deal would value Level One shares at $48.75. The deal is also Intel's first major acquisition using its own stock. Earlier, Level One shares closed $5.25 lower at $27.12 in active trading on Nasdaq, while Intel drifted $1.31 lower. The deal represents a 50 percent premium over its closing price. Sacramento, Calif.-based Level One makes semiconductors used in high-speed telecommunications and data communications networks. The company develops so-called mixed signal chips, which combine analog and digital technology for use in both local area networks and wide area networks. ''From a silicon point of view, we are very small (in networking) and we don't participate in those markets today and that is the purpose of this acquisition,'' said Mark Christensen, vice president and group manager of Intel's network communications group, on a conference call. Intel has beefed up its networking business, in part through acquisitions that focus on the small to medium business arena. Just Monday, Intel closed a $185 million deal to buy Shiva Corp., which develops virtual private network equipment and remote access servers. ''This was the largest acquisition in our company's history and it is the foundation for our growth in this area,'' Christensen said. ''If the cultures and the personalities and the vision had not been so closely aligned, I don't know if this deal would have happened.'' Ashok Kumar, a Piper Jaffray analyst, said that Intel was making networking a big focus because it realized that in order for customers to buy higher cost PCs with more processing power, they must have faster networking capabilities and the ability to get more kinds of data through the network. ''While the crown jewels continue to remain the microprocessors, they realize that without the additional bandwidth and broadband access to the client side, it is a hard sell to attract customers to the sweet spot of the computing market,'' Kumar said. ''It's a good strategic fit.'' Last July, Intel and Level One formed a pact to develop high-speed corporate local area networking technology. Intel, based in Santa Clara, Calif., said it would issue about 18.6 million shares to consummate the tax-free merger which was expected to close by the end of the second quarter. The exchange rate and the total number of shares will be adjusted to account for Intel's pending 2-for-1 stock split. Intel executives said they expect some charges to result from a deal this large, even though it is in stock, but they said they cannot yet disclose any further financial details. ''Our strategy is to be a major building block supplier in all aspects of this networking business,'' said Intel chief executive Craig Barrett, during a conference call. They also said they do not expect any regulatory hurdles in the deal. Level One Chief Executive Robert Pepper will join Intel as vice president of the company's network communications group and general manager of the Level One Components Division. Level One generated 1998 revenues of $263 million and had about 830 employees. It will become a wholly owned subsidiary of Intel. The company is a ''fabless'' semiconductor company, meaning that it does not manufacture its own chip designs, but contracts them out to other companies. That manufacturing strategy will stay in place after the deal is completed. Analysts said Level One's main competitors include networking chip makers Broadcom Corp. (Nasdaq:BRCM - news) and PMC-Sierra Inc. (Nasdaq:PMCS - news)