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

To: Harry Landsiedel who wrote (79727)	4/23/1999 12:45:00 AM
From: Ian Davidson	Respond to of 186894

From tomorrow's WSJ, April 23, 1999 Intel Sees Revenue Rising in Future From Internet, Networking Ventures By DEAN TAKAHASHI Staff Reporter of THE WALL STREET JOURNAL NEW YORK -- Touting its place in the fast-growing Internet economy, Intel Corp. told analysts that new Internet services and networking ventures could generate billions of dollars in new revenue in a few years. Craig Barrett, chief executive officer of the Santa Clara, Calif., chip company, said Intel is taking advantage of the rapid growth of electronic commerce to position itself as the "building-block supplier to the Internet economy." But in contrast to Intel's role as a chip maker, the building blocks will consist of hardware and software. Andrew S. Grove, Intel's chairman, said at the biannual analyst meeting that Intel's new businesses present opportunities similar to past upheavals such as data processing in the 1970s and low-cost commodity manufacturing in the 1980s. "In this industry, it is like the duck that looks calm on the surface and is paddling like heck underneath the surface," he said. "An enormous re-engineering of business is going on below the water line." Mr. Barrett said the company's networking business has been growing about 50% a year and should top $1 billion given the pending acquisition of Level One Communications Corp. He said that business could grow to several times that size in a few years thanks to new initiatives in chips and systems that will tie together data and voice networks. And Gerhard Parker, a longtime manufacturing executive who was appointed to head Intel's new business ventures last year, unveiled the company's plan to create a major data-services business known as Internet hosting. Intel will set up data centers with thousands of powerful computers known as servers to provide data processing, storage and other computing services for companies that connect users to the Internet. Each center will cost $50 million to $100 million and use 2,000 to 5,500 servers. Intel itself will not become an Internet service provider, but it will provide outsourcing services to those companies. Mr. Parker said the new venture sprouted from Intel's relationships with companies like Excite Inc. and will likely bring it into competition with a diverse range of companies, from International Business Machines Corp. to Electronic Data Systems Inc. "It is a big opportunity, but I am not sure what advantage Intel has over everyone else who wants to be in this business," said David Wu, an analyst at ABN/Amro in San Francisco. "But it says a lot when Intel puts someone as senior as Gerry Parker into that position." Intel can get serious about investing in new Internet businesses because of the windfall from its microprocessors, which accounted for 80% of revenue last year and all of the profit. Mr. Parker said Intel started its own internal venture-capital fund, which will spend $50 million in 1999, to finance new businesses proposed by employees. Intel also said electronic commerce is catching on quicker than anyone expected. Its own e-commerce revenue is at $1 billion a month and could hit $15 billion, or half of revenue, in 1999, according to Sean Maloney, senior vice president of sales and marketing. Mr. Maloney said that in two or three years about 90% of Intel's revenue will come from e-commerce. In other new business, Intel has begun to embrace information appliances, or devices smaller than PCs that connect to the Internet. Intel said it would introduce two new StrongArm microprocessors next month, which would serve as the brains of information appliances such as handheld computers and TV set-top boxes. In its core microprocessor business, Intel also has a variety of new products in the works. Paul Otellini, executive vice president, said the company will launch a 466-megahertz Celeron microprocessor on Monday for the low end of the market. He also said that Intel's portable chips would soon match the performance of its chips for desktop computers. Mr. Barrett said that Intel has begun shifting to lower-cost 0.18 micron manufacturing, which will help it deliver lower-cost microprocessors with speeds reaching 600 megahertz in the second half of 1999 and 700 megahertz in the first half of 2000. The first 0.18 micron Pentium II mobile chips will go on sale later this quarter, putting Intel ahead of competitors. Most descriptions of the new businesses came after the close of markets. In trading on the Nasdaq Stock Market Thursday, Intel's stock rose $3.0623, or 5.2%, to $61.50.

To: Harry Landsiedel who wrote (79727)	4/23/1999 2:07:00 AM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Harry - Re: " Does this mean Intel is going to start building internet servers and competing with it's customers, like cpq, dell, ibm, and HP? " In the last few days, Intel announced their intention of delivering a specific processor for switch and router controllers that will permit standardized versions of these boxes (Switches/routers) using Intel's components as opposed to the individual custom ASICs that the various switch/router manufacturers now design for their "boxes". If successful (IF) the costs of switches/routers will come down and performance will improve along with Intel's process technology roadmap, as opposed to the "Balkanized" approach that now exists with widely different HARDWARE architectures from Cisco, 3COM, Nortel, Jupiter, Xylan, etc., etc. Intel's approach is to provide a STANDARD BASIS for the inner hardware of these machines, providing a growth market for more Intel silicon. Paul