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

To: Amit Patel who wrote (80454)	5/5/1999 7:59:00 PM
From: DiViT	Respond to of 186894

Intel buying into Digital Video? Any confirmation would be appreciated... Read on: Intel's non-PC journey may include a pit stop at C-Cube By Om Malik NEW YORK. 10:15AM EST—Intel Corp. (nasdaq: INTC), faced with the prospect of a slowing personal computer market, is diversifying into non-PC product lines. Networking, communications and graphics are three new segments where the Santa Clara, Calif.-based chipmaker wants to increase its market share. Intel, the world's largest microprocessor company, is turning to the networking chips to keep its revenues and sales momentum. If Intel is to keep growing at anything like its historic rates--about 27% a year over the past quarter-century--it must find the new heart of the Information Age and become as indispensable there as it is to the PC. In March the company snapped up communications chipmaker Level One Communications (nasdaq: LEVL) for $2.2 billion. On April 29, Intel announced that it would buy 2.9% of Proxim (nasdaq: PROX), a Mountain View, Calif.-based company that makes wireless LAN chips. Intel also has acquired a warrant to purchase 96,000 additional shares. Then on May 3, Intel announced a new Strong ARM chip meant for portable devices and other non-PC hardware. The new chip running at 600 MHz is targeted at power-sensitive handheld products through performance-hungry Internet access devices. A smart move. For while the PC market is growing 15% every year, International Data Corp., a Framingham, Mass.-based research group, estimates that the market for smart handheld devices (including smart phones, handheld companions and other vertical application devices) will grow worldwide at a compound annual growth rate of 43% between 1998 and 2002. IDC estimates that by 2002 worldwide volume shipments of these devices to surpass 25 million units in a market worth more than $13 billion. But this is not where Intel's quest for non-PC markets is likely to end. Forbes.com has heard from Silicon Valley insiders that Intel might be taking a close look at C-Cube Microsystems (nasdaq: CUBE), a Milpitas, Calif.-based company that is fast becoming a major player in the digital and broadcast semiconductor markets. Among options being explored include Intel's taking a minority stake in C-Cube or perhaps forming a joint venture with C-Cube. A C-Cube spokeswoman declined to comment on the rumor, citing corporate policy. Dean McCarron, analyst with Scottsdale, Ariz.-based semiconductor-industry research firm Mercury Research, rules out any sort of marriage between the two. Wall Street analysts also agree, even though they do not discount the possibility of a relationship. Charles Glavin, who tracks the semiconductor business for Credit Suisse First Boston in San Francisco, thinks a joint venture would be a smart idea for both companies. But he thinks that an outright purchase for Intel would be pointless since C-Cube does not really have the PC- or the client-side focus that is part of the Intel game plan in hot markets such as broadband, digital broadcast and networking. C-Cube chips, on the other hand, are used in diverse back-end equipment used by broadcasters. In addition, while C-Cube makes chips that are used as decoders for Digital Video Devices (DVDs) and has expertise in compression technologies such as Motion Picture Experts Group (MPEG2). Intel, on the other hand, is looking to add DVD, compression and other related technologies on its main processors, using software decoding. With more than ten semiconductor buyouts in the first four months of 1999, it is no surprise that the Silicon Valley grapevine is working overtime on this possible Intel-C-Cube deal.