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Thanks. That must be what I was thinking of.
From reading the financial and trade press, I formed an opinion that BRCM’s Henry Nicholas was the kind of character who was capable of filing a bogus lawsuit if he thought it would help the company’s stock price. I have no knowledge of the actual merit of any of these cases. Regards, Dew
I clearly recall mutual lawsuits between INTC and BRCM on these matters, but maybe BRCM’s suit never went anywhere…
TI Says It's Ready for Intel Wireless Onslaught
http://story.news.yahoo.com/news?tmpl=story2&cid=581&u=/nm/20030214/tc_nm/tech_intel_ti_dc&a...
SAN FRANCISCO (Reuters) - Texas Instruments Inc, .the top maker of semiconductors for cell phones, on Thursday said it was well-positioned for the pending battle over the wireless Internet phone market with Intel Corp.
Earlier on Thursday, Intel unveiled a chip for new generation phones that combines a processing, flash memory and communications on a single piece of silicon. The chip will allow users to do videoconferencing and play online games, among other applications.
Samples of Intel's PXA800F, code-named "Manitoba," will appear in phones later this year, with large-scale production likely in the first half of next year, Intel said.
Texas Instruments, however, said there are smartphones and personal digital assistants on the market now that contain its integrated wireless OMAP chips.
Those chips have integrated digital signal communications processors, SDRAM (synchronous dynamic random access memory) and microprocessors, said Alain Mutricy, general manager of TI's OMAP wireless processor group.
Texas Instruments plans to add radio frequency and analog components to the integrated chip that will be available in samples to cell phone customers next year, he said.
"We are far ahead of Intel," Mutricy said, a claim that Intel disputed.
Both companies claim their approaches are better, with either lower power consumption or faster speed and tighter integration or cheaper memory.
"It's going to be quite a horse race and the odds are that both companies are, to some degree, going to rescue the cell phone industry" by delivering advanced functionality, said Richard Doherty, research director at The Envisioneering Group, a market research and technology assessment company in Seaford, New York. "Intel has raised the bar."
Dallas-based Texas Instruments has an advantage being the top maker of semiconductors for cell phones, while Intel is a leader in selling flash memory to handset makers and Pocket PC-based PDAs, both companies said.
Intel hasn't announced any contracts, but said it is in talks with the world's top handset companies.
Texas Instruments OMAP customers include NEC Corp. (6701.T), Matsushita Electric Industrial Co. Ltd. (6752.T) and Fujitsu Ltd. (6702.T), which all supply phones to NTT DoCoMo (9437.T); Nokia (NOK1V.HE), the No. 1 maker of cell phones; and Palm Inc., the No. 1 maker of PDAs.
Shareholder settlement:
The only reason one would opt out of the class-action settlement would be to pursue private litigation against the company to seek a better judgment or settlement than the one proposed in the class suit. Clearly not a reasonable option for anyone other than a very large shareholder.
Regarding the settlement amount per se: you get a sizable per-share amount only on shares bought during one of two periods: 1) The IPO and the period immediately following it; or 2) The period from 6/14/01-6/20/01 (inclusive). Shares bought at other times receive much smaller settlement amounts or nothing at all. Consult the detailed schedule in the legal documents you received to determine the exact amount you can expect to receive.
What ever happened to BRCM’s suit that INTC was ripping off BRCM’s employees and trade secrets? Was it dropped or settled? T.i.a.
Speaking of hot spots:
http://www.wired.com/news/print/0,1294,57641,00.html
Here's Broadband in Your Pocket
By Elisa Batista
Feb. 12, 2003
Australian researchers unveiled a chip that lets cell-phone users receive high-quality face-to-face video and other streaming media at rates faster than a home broadband connection.
Developed at Bell Labs in Australia, the chip works on a next-generation cell-phone network like the one powering the Sprint PCS Vision service and can run programs at up to 24 megabits per second -- almost 20 times faster than a traditional T1 line.
The "turbo decoder chip," which is available for a licensing fee, lets users of any wireless device on a 3G network conduct video teleconferences, tap into corporate data behind a company firewall, and send and receive multimedia applications like MP3 tunes, video clips and PowerPoint presentations.
"We're talking about data rates competitive with the most advanced broadband wired modems," said Chris Nicol, lead researcher for the team that developed the chip.
Industry analysts said the chip could compete head-to-head with Wi-Fi wireless Internet networks, which have been hugely popular in coffee shops, homes, libraries and offices, but can deliver data to a PC at up to only 11 megabits per second.
"That's pretty impressive performance," said Stan Bruederle, an analyst for market research firm Gartner Dataquest.
The introduction of such a chip may breathe life into 3G networks. Many analysts and consumers have favored Wi-Fi over 3G because it's more readily available, cheaper and easier to use.
The big question, however, is whether Bell Labs' turbo chip can compete with Wi-Fi on price, Bruederle said.
Most Wi-Fi customers don't pay more than $40 a month for service. But Bruederle pointed out that using a cell phone as a modem for Internet access or running Internet applications on a wireless device powered by a cell-phone network could prove to be expensive -- many carriers charge by the minute.
Also, Wi-Fi technology operates on a slice of airwaves that is largely unregulated by the government and can be used without a charge. Cell-phone carriers, on the other hand, paid millions, if not billions, of dollars for their wireless spectrum. As a result, they're looking for ways to recoup those costs -- most likely at the expense of their customers, Bruederle said.
"It's a question of economics," he said.
Other analysts questioned whether Bell Labs' development may have come a little too late.
Nicol said the chip has been in development for three years, but that Bell Labs scientists grappled with technical issues such as how to use the spectrum most efficiently so that the wireless device could deliver the content at high speeds without draining the battery.
"Turbo decoding is one of the most computationally intensive functions performed on a mobile 3G network," Nicol said.
Unfortunately for Bell Labs, the market doesn't seem to have waited for those engineers to solve all the equations. Most cell-phone carriers have already decided to operate their 3G networks as they are or offer Wi-Fi service, said Joe Laszlo, an analyst with Jupiter Research.
"Carriers are already spending billions of dollars in technology," Laszlo said. "It's hard to get them to shift those billion-dollar bets onto another technology."
Forbes on AMD::
http://www.forbes.com/2003/02/12/cz_qh_0212amd_print.html
AMD Learns To Share
Quentin Hardy, 02.12.03, 8:50 AM ET
Searching for ways to slash its fixed costs, struggling chipmaker Advanced Micro Devices is speeding up the hunt for a partner to share costs on a 300-millimeter wafer fabrication plant, said Chief Executive Hector Ruiz.
"The next three or four months, we have to decide on a partner," he said. Ruiz's urgency stems from his stated goal of moving AMD's variable costs to 30% of operating expenses, from a current 20%. "That might not sound significant, but it's dramatic in our industry," Ruiz said.
In a similar cost-cutting move, in January AMD announced that it would jointly develop semiconductor manufacturing technologies for 65-nanometer and 45-nanometer chips with IBM. AMD moved a number of its technologists to New York as a result of the deal, which will last until at least 2006.
"We need to find future R&D spending cuts," said Ruiz. "The goal is to get expenses into the midteens (as a percentage of revenue.) Right now it's 20%." For the 2002 calendar year, R&D was 30% of revenue. [Fractions look bloated when the denominator is small –Dew]
AMD, long the embattled smaller competitor to chip giant Intel, finished 2002 with a net loss of $854 million on sales of $686 million. Excluding restructuring and other charges, the company lost $235 million, reflecting a worldwide drop in demand for most semiconductors.
Ruiz, speaking at a Bank of America technology conference yesterday, said that in recent months he has focused on tightening the company's supply chain, boosting its capitalization and reducing break-even levels, in part by lowering fixed costs. With inventories at four weeks' supply compared with eight weeks previously, 2,000 employees gone and capital expenditures cut to $705 million from $800 million, Ruiz said AMD now has a cost structure to break even on $800 million in revenue.
Now it is up to customer demand to deliver those top-line numbers--in particular, demand for flash memory chips in advanced cell phones as well as strong sales of AMD's 64-bit Opteron processor for computer servers, due to launch on April 22. Sales of chips into standard cellular phones and personal computers, he said, would likely reflect the "flattish" global demand for those products.
In the past year, Ruiz said, AMD's share of flash memory chips in high-performance cell phones has doubled to 20%, a trend he expected would continue. In addition, AMD has signed seven of China's ten indigenous cell phone makers to AMD chips.
Still, the executive gave little reason to expect a robust turnaround soon. While demand for the high-density flash chips was "healthy," he said, "we haven't raised prices." Instead, Ruiz was just grateful for relief from recent rounds of price cutting. "I see things to indicate pricing will be far more stable than last year," he said.
>> I expect [Centrino] to quickly proliferate to many different markets, probably quicker than Compal realizes. <<
That Compal guy is not offering an opinion about Centrino, he is saying that his company is not going to buy Centrino for consumer laptops because they won’t be able to make money doing it.
It doesn’t matter what you or I think – but it does matter a lot what people like Ray Chen think.
Compal: Centrino unlikely to penetrate consumer market this year
http://www.digitimes.com/NewsShow/Article_print.asp?datePublish=2003/02/12&pages=PR&seq=206
Wednesday 12 February 2003
Compiled from outside sources; Sarah Chang, DigiTimes.com
Ray Chen, president of Compal Electronics and Compal Communications, predicts that Intel’s Centrino mobile technology is unlikely to penetrate the consumer market this year unless its unit price can cut to US$100, the Chinese-language Commercial Times reported.
Intel has informed Taiwanese notebook makers that it will quote Centrino mobile technology, its new brand name for a Pentium M processor, 855 family chipset and wireless network connection, at around US$200, Chen revealed.
Chen believes that such a price would limit Centrino to only corporate users, with Centrino-based notebooks having to be sold at US$1,500-1,900 to be profitable. To penetrate the consumer market, notebooks must be priced below US$1,500, with a corresponding price for Centrino of around US$100, said Chen.
With the consumer market accounting for around half of the total notebook market, Intel should lower Centrino’s price to stimulate notebook demand, Chen stated.
Compal’s Centrino-based notebooks, all aimed at corporate users, will ship in the second or third quarter, said Chen.
[Thanks to mmattheych on Yahoo]
>> Dew, why don't press releases like this help TMTA stock? <<
Patience, my friend! Instead of focusing unduly on day-to-day price movements, think of your TMTA holding the way a VC would. At the current price, you own shares for close to their net cash value. Even real VC’s rarely get a deal that good. Regards, Dew
P.S. TMTA just announced a list of global sales reps and distributors:
http://biz.yahoo.com/bw/030212/120101_1.html
>> You think it makes sense to compare today's GMs with the height of the boom? That's comic relief. <<
EP: This comedy business is rough – maybe both of us should keep our day jobs…
Philips to cut costs in chip unit:
http://www.marketwatch.com/news/print_story.asp?print=1&guid={14DB1BC0-0448-4B87-A65A-C9CFB47871...
>>
Royal Philips, Europe's largest electronics maker, on Tuesday said it's cutting costs as well as research and development spending to push down the break-even point for its struggling semiconductor business… The company said it continues to target cost-savings of 1 billion euros and said it's aiming at profitability in its semiconductor business in the latter half of the year "under normal market circumstances"…
<<
>> I like to think the rally last Nov. was the bounce off the bottom and we are now re-testing it, but only time will tell. <<
Bearing in mind that the designation of a “bear market” is merely an abstraction, I believe that the brutal bear market of the past few years ended on 10/9/02. FWIW. Dew
>> For comparison, I looked up Corning's [gross-margin] numbers. <<
Why Corning? Did someone say that Corning has had strong gross margins lately?
Corning barely managed to stay out of bankruptcy and now, by dint of some astute balance-sheet maneuvers, they have become the turnaround story of the year.
Corning and INTC are both renowned for their proprietary technology, including an emphasis on leading-edge production techniques. But that’s where the similarity ends.
>> 49% gross margins look outstanding compared to the 31% in 1986 [emphasis added], the last major semi bottom. Try puting things in perspective. <<
EP: you use 1986 as a base for gauging INTC’s financial metrics? I assume you meant that to be for comic relief. 1986 was 17 years ago -- the year Microsoft went public.
I’d rather not belabor the point because it’s not my intention to bash INTC’s recent financial performance (which is quite respectable under the circumstances). I simply couldn’t allow the cited comment implying healthy gross margins to go unchallenged.
>> It would seem that Tim's assessment on gross margin is reasonable. <<
Are we looking at the same numbers? What I see is that 2001 and 2002 had the lowest gross margins since 1989. Moreover, the average of the 2001 and 2002 margins – 49.5% -- was 1,080 basis points below the 60.3% level attained as recently as 1997.
>> Intel hasn't done badly during the tech wreck. Look at sales and profits, and gross margins. Still very high, all of them. <<
I was going to elaborate on the misstatement there with respect to gross margins – but then I decided to let Usuck have the first crack at it.
Business Week on Centrino:
[No new info here -- just some color, most of which is probably old hat to readers of this message board. Note: bold-faced emphasis added by Dew]
http://www.businessweek.com:/print/technology/content/feb2003/tc20030211_8644_tc119.htm?tc
Whoa! Intel's New – Slower -- Chip?
By Olga Kharif in Portland, Ore.
FEBRUARY 11, 2003
The giant says its latest laptop processor will slip in clock speed, yet achieve better performance. You can bet AMD and others are listening
Intel wants to take your mind off chip speeds -- especially if you're going to be in the market for a new laptop. That might sound crazy to anyone who has watched Intel constantly crank out newer, faster chips -- and constantly try to convince consumers and corporations that the speediest semiconductor is the answer to all their computing prayers. But in a reversal of emphasis, Intel is about to start pressing the public to buy laptops with new brains that aren't faster than existing ones. Instead of simply running more rapidly, says Intel, its new laptop chip will result in better overall performance in real-world applications.
However, by taking this new, rather un-Intel-like approach to chipmaking and -- perhaps more important -- to marketing, the world's biggest semiconductor producer is attempting to dominate what promises to be a rare, high-growth tech market. Or possibly laying itself open to a big counterattack.
Intel says it achieves this performance increase without a speed increase because of the way it's bundling the new processor with other components into an integrated offering, a first for Intel. Called Centrino and set to be launched on Mar. 12, the package includes a main low-power-consuming processor specifically designed for wireless notebooks, a choice of one of two chips controlling graphics, and a wireless chip allowing the laptop to connect to wireless local-area networks.
GOTTA HAVE IT
This last piece is critical, considering the explosion of interest in Wi-Fi high-speed wireless Net access. Today, most users who want to connect to, say, a Wi-Fi network at the local Starbucks have to buy special wireless cards to put into their computers. But a wireless chip like one that's part of Centrino functions as an embedded wireless card -- essentially making any notebook wireless-ready.
And that's what makes these products so alluring. For 30 years, the bulk of computer processors Intel made went into desktop PCs that either sat by themselves or were connected to a network, or later to the Internet, by wires. But as corporate buyers and consumers start replacing their PCs in late 2003 or early 2004, they're expected to go ga-ga for laptops, especially those that can make batteries last longer and offer built-in wireless Web connectivity.
While only 5.7% of all notebooks in existence in 2002 were wireless-ready, that percentage will rise to 35% in 2003 and 90% by 2005, according to market researcher Cahners In-Stat. In two years, 50% of corporate users will be tapping on laptops, up from 20% today, estimates Charlie Glavin, an analyst with investment bank ThinkEquity Partners. And consumers won't be far behind.
FULL-COURT PRESS
.So Intel, which already controls most of the market for laptop processors, "basically has to reinvent itself," says Glavin. And that's pretty much what the marketing blitz behind Centrino, Intel's first mass-market brand since the original Pentium was introduced in 1993, will set out to do. In fact, Intel says it will pour more into marketing Centrino this year than the $300 million it spent on Pentium 4 in its launch year, according to Pam Pollace, vice-president and director of corporate marketing at Intel. Centrino, whose pricing hasn't been set yet, is expected to replace Celeron, Pentium 3, and Pentium 4 Mobiles as Intel's main notebook chip by the end of 2004.
As Intel, which already holds an 80% share of the PC processor market, embarks on this new marketing drive, it's adopting a strategy more like the one archrival AMD (as well as Apple) has been using for years. And therein lies the danger. AMD's top chips have often run at slower absolute speeds than Intel's fastest models, but AMD has always claimed superior real-world performance because of more efficient internal architecture. Ditto for Apple and its PowerPC chips (made by IBM).
Centrino, too, will claim better overall throughput despite its slower clock speed, 1.6 gigahertz, compared to Intel's current mobile Pentium 4's 2.4 GHz. And taking a page from Transmeta's Crusoe laptop chip, Intel will also emphasize Centrino's ability to extend battery life. Despite Centrino's slower speed vs. the Pentium 4 Mobile, "it will absolutely be the fastest processor on the planet for the mobile environment," claims Anand Chandrasekher, Intel's vice-president and general manager for mobile platforms group.
HIGH HURDLES
.In making such claims, though, Intel might itself be bolstering the arguments its rivals have long been making that chip speed is hardly everything when it comes to gauging processor performance. Tim Bajarin, president of tech marketing consultancy Creative Strategies in Campbell, Calif., believes that ultimately Intel's strategy will pay off, but not before a long hard slog.
Among the hurdles Intel will face: The new benchmarks won't be as easy to explain to end users and could easily result in heightened competition from rival chipmakers eager to go up against Intel on the terms they've been stressing all along. Also, many of Intel's PC-making customers fear that packaged offerings might rob them of the ability to choose different vendors for different components. And they may not want to become even more dependent on Intel, especially since many specialty companies offer more advanced individual products compared to Intel's Centrino bundle.
Although the CPU itself -- called Pentium M -- that's part of the Centrino brand will also be sold separately, most analysts believe that Intel will offer PC makers major discounts -- and advertising dollars -- to make the bundle irresistible. Intel is expected to offer generous reimbursements to PC makers that mention Centrino in their ads.
"NO LONGER IMPORTANT."
Intel's carrot is a new logo that laptop makers can slap on their Centrino machines, part of the long-running "Intel Inside" logo campaign. To be able to put the Centrino logo -- looking like a heart on its side -- on their laptops, manufacturers will have to buy the three-chip bundle.
Intel's strategy, however, is already proving contagious: In March, Taiwan's VIA Technologies -- mostly known for its motherboards but also a chipmaker with a sizable following of white-box manufacturers -- will start offering a similar three-chip bundle to its customers, says Richard Brown, associate vice-president for marketing at VIA. Referring to its new 1-GHz laptop chip, Brown says: "Megahertz are no longer important. Now, we can [sell chips] just as well as Intel can."
That may be an overstatement. But Intel will clearly have to overcome resistance from PC manufacturers. "Centrino definitely has a role in our portfolio, but so do other products," says Matthew Wagner, manager of product marketing for Hewlett-Packard's personal systems group. "It's all about flexibility."
PLAYING CATCH-UP
So HP plans to use Centrino as well as separate chips from other suppliers. And on Jan. 29, HP, IBM, NEC, and Toshiba announced that they would purchase wireless chips -- more advanced than those initially available with Centrino -- from startup Atheros Communications in Sunnyvale, Calif. Why Atheros? "We are specialists. We live, breathe, and die that one thing," says President and CEO Rich Redelfs.
Indeed, the wireless chips included in Centrino are behind the competition in functionality. Intel's initial chip will support just the so-called 802.11b standard, commonly used for wireless LANs, even though other makers already offer chips that support that standard and the newer, faster 802.11a. Intel can't match that until the second quarter.
By that time, companies such as Agere Systems, whose chips are used by Dell, among others, and is the No. 2 wireless-chipmaker behind Intersil, will already offer chips based on three standards, says Tony Grewe, Agere's director of strategic marketing. PC makers and end users could be leery of Intel's early efforts here. Says Allan Nogee, an analyst with In-Stat: "When you pay $2,000 for a laptop, you don't want to be caught with just one [wireless] technology."
SLOW START
Considering that most PC companies also don't like to depend on one supplier for their key chips, Mark Grossman, an analyst with SG Cowen Securities, doesn't expect Intel to gain much more market share in notebook processors from rivals like AMD and Transmeta. Indeed, the latter says it's seeing rising orders, according to Mike DeNeffe, Transmeta's marketing director.
For the same reason, many analysts estimate that Intel will take perhaps only a few percentage point of share away from entrenched graphics-chip makers like Nvidia and ATI Technologies. "We think of ourselves, first and foremost, as a partner of Intel," says Philip Eisler, vice-president and general manager for mobile and integrated business unit at ATI. And he points out that his company also makes chips that can be used to enhance Centrino's relatively limited graphics abilities. So, ATI could actually benefit from Centrino's success. It remains to be seen, however, whether that gain would more than offset sales lost to Intel's new bundle. Nvidia declined to comment.
At first, most notebook makers would likely install Centrino only in a few models, says Creative Strategies' Bajarin. Intel confirms that the package will cost more than a comparable stand-alone processor, and anything that drives up laptop makers' costs would be more than unwelcome, considering how thin their margins are already. However, any laptop maker that wants to build wireless-ready machines will have to spring for some extra cost, either for the additional separate wireless chip or for a Centrino bundle.
SPREADING THE GOSPEL
Still, Intel's Chandrasekher claims initial orders for Centrino already exceed by three or four times what Pentium 4 Mobile got when it came out in March, 2002. This March, PC maker Gateway will begin outfitting some of its most popular laptops with Centrino. And by yearend, more than half of its notebooks will have Centrino inside, says Mike Stinson, Gateway's general manager for mobile products. So far, most manufacturers seem pleased with the quality of Intel's chips, says Dean McCarron, founder of PC components consultancy Mercury Research in Cave Creek, Ariz.
The adoption of the Centrino brand could take a while, as Intel spreads its new, speed-isn't-everything gospel to computer makers and consumers -- a message that rivals might actually welcome and help spread. With $10.8 billion in cash as of yearend 2002, though, Intel has all the time in the world. And it's betting that the wait will be worth it.
Business Week on Centrino:
[No new info here -- just some color, most of which is probably old hat to readers of this message board. Note: bold-faced emphasis added by Dew]
http://www.businessweek.com:/print/technology/content/feb2003/tc20030211_8644_tc119.htm?tc
Whoa! Intel's New – Slower -- Chip?
By Olga Kharif in Portland, Ore.
FEBRUARY 11, 2003
The giant says its latest laptop processor will slip in clock speed, yet achieve better performance. You can bet AMD and others are listening
Intel wants to take your mind off chip speeds -- especially if you're going to be in the market for a new laptop. That might sound crazy to anyone who has watched Intel constantly crank out newer, faster chips -- and constantly try to convince consumers and corporations that the speediest semiconductor is the answer to all their computing prayers. But in a reversal of emphasis, Intel is about to start pressing the public to buy laptops with new brains that aren't faster than existing ones. Instead of simply running more rapidly, says Intel, its new laptop chip will result in better overall performance in real-world applications.
However, by taking this new, rather un-Intel-like approach to chipmaking and -- perhaps more important -- to marketing, the world's biggest semiconductor producer is attempting to dominate what promises to be a rare, high-growth tech market. Or possibly laying itself open to a big counterattack.
Intel says it achieves this performance increase without a speed increase because of the way it's bundling the new processor with other components into an integrated offering, a first for Intel. Called Centrino and set to be launched on Mar. 12, the package includes a main low-power-consuming processor specifically designed for wireless notebooks, a choice of one of two chips controlling graphics, and a wireless chip allowing the laptop to connect to wireless local-area networks.
GOTTA HAVE IT
This last piece is critical, considering the explosion of interest in Wi-Fi high-speed wireless Net access. Today, most users who want to connect to, say, a Wi-Fi network at the local Starbucks have to buy special wireless cards to put into their computers. But a wireless chip like one that's part of Centrino functions as an embedded wireless card -- essentially making any notebook wireless-ready.
And that's what makes these products so alluring. For 30 years, the bulk of computer processors Intel made went into desktop PCs that either sat by themselves or were connected to a network, or later to the Internet, by wires. But as corporate buyers and consumers start replacing their PCs in late 2003 or early 2004, they're expected to go ga-ga for laptops, especially those that can make batteries last longer and offer built-in wireless Web connectivity.
While only 5.7% of all notebooks in existence in 2002 were wireless-ready, that percentage will rise to 35% in 2003 and 90% by 2005, according to market researcher Cahners In-Stat. In two years, 50% of corporate users will be tapping on laptops, up from 20% today, estimates Charlie Glavin, an analyst with investment bank ThinkEquity Partners. And consumers won't be far behind.
FULL-COURT PRESS
.So Intel, which already controls most of the market for laptop processors, "basically has to reinvent itself," says Glavin. And that's pretty much what the marketing blitz behind Centrino, Intel's first mass-market brand since the original Pentium was introduced in 1993, will set out to do. In fact, Intel says it will pour more into marketing Centrino this year than the $300 million it spent on Pentium 4 in its launch year, according to Pam Pollace, vice-president and director of corporate marketing at Intel. Centrino, whose pricing hasn't been set yet, is expected to replace Celeron, Pentium 3, and Pentium 4 Mobiles as Intel's main notebook chip by the end of 2004.
As Intel, which already holds an 80% share of the PC processor market, embarks on this new marketing drive, it's adopting a strategy more like the one archrival AMD (as well as Apple) has been using for years. And therein lies the danger. AMD's top chips have often run at slower absolute speeds than Intel's fastest models, but AMD has always claimed superior real-world performance because of more efficient internal architecture. Ditto for Apple and its PowerPC chips (made by IBM).
Centrino, too, will claim better overall throughput despite its slower clock speed, 1.6 gigahertz, compared to Intel's current mobile Pentium 4's 2.4 GHz. And taking a page from Transmeta's Crusoe laptop chip, Intel will also emphasize Centrino's ability to extend battery life. Despite Centrino's slower speed vs. the Pentium 4 Mobile, "it will absolutely be the fastest processor on the planet for the mobile environment," claims Anand Chandrasekher, Intel's vice-president and general manager for mobile platforms group.
HIGH HURDLES
.In making such claims, though, Intel might itself be bolstering the arguments its rivals have long been making that chip speed is hardly everything when it comes to gauging processor performance. Tim Bajarin, president of tech marketing consultancy Creative Strategies in Campbell, Calif., believes that ultimately Intel's strategy will pay off, but not before a long hard slog.
Among the hurdles Intel will face: The new benchmarks won't be as easy to explain to end users and could easily result in heightened competition from rival chipmakers eager to go up against Intel on the terms they've been stressing all along. Also, many of Intel's PC-making customers fear that packaged offerings might rob them of the ability to choose different vendors for different components. And they may not want to become even more dependent on Intel, especially since many specialty companies offer more advanced individual products compared to Intel's Centrino bundle.
Although the CPU itself -- called Pentium M -- that's part of the Centrino brand will also be sold separately, most analysts believe that Intel will offer PC makers major discounts -- and advertising dollars -- to make the bundle irresistible. Intel is expected to offer generous reimbursements to PC makers that mention Centrino in their ads.
"NO LONGER IMPORTANT."
Intel's carrot is a new logo that laptop makers can slap on their Centrino machines, part of the long-running "Intel Inside" logo campaign. To be able to put the Centrino logo -- looking like a heart on its side -- on their laptops, manufacturers will have to buy the three-chip bundle.
Intel's strategy, however, is already proving contagious: In March, Taiwan's VIA Technologies -- mostly known for its motherboards but also a chipmaker with a sizable following of white-box manufacturers -- will start offering a similar three-chip bundle to its customers, says Richard Brown, associate vice-president for marketing at VIA. Referring to its new 1-GHz laptop chip, Brown says: "Megahertz are no longer important. Now, we can [sell chips] just as well as Intel can."
That may be an overstatement. But Intel will clearly have to overcome resistance from PC manufacturers. "Centrino definitely has a role in our portfolio, but so do other products," says Matthew Wagner, manager of product marketing for Hewlett-Packard's personal systems group. "It's all about flexibility."
PLAYING CATCH-UP
So HP plans to use Centrino as well as separate chips from other suppliers. And on Jan. 29, HP, IBM, NEC, and Toshiba announced that they would purchase wireless chips -- more advanced than those initially available with Centrino -- from startup Atheros Communications in Sunnyvale, Calif. Why Atheros? "We are specialists. We live, breathe, and die that one thing," says President and CEO Rich Redelfs.
Indeed, the wireless chips included in Centrino are behind the competition in functionality. Intel's initial chip will support just the so-called 802.11b standard, commonly used for wireless LANs, even though other makers already offer chips that support that standard and the newer, faster 802.11a. Intel can't match that until the second quarter.
By that time, companies such as Agere Systems, whose chips are used by Dell, among others, and is the No. 2 wireless-chipmaker behind Intersil, will already offer chips based on three standards, says Tony Grewe, Agere's director of strategic marketing. PC makers and end users could be leery of Intel's early efforts here. Says Allan Nogee, an analyst with In-Stat: "When you pay $2,000 for a laptop, you don't want to be caught with just one [wireless] technology."
SLOW START
Considering that most PC companies also don't like to depend on one supplier for their key chips, Mark Grossman, an analyst with SG Cowen Securities, doesn't expect Intel to gain much more market share in notebook processors from rivals like AMD and Transmeta. Indeed, the latter says it's seeing rising orders, according to Mike DeNeffe, Transmeta's marketing director.
For the same reason, many analysts estimate that Intel will take perhaps only a few percentage point of share away from entrenched graphics-chip makers like Nvidia and ATI Technologies. "We think of ourselves, first and foremost, as a partner of Intel," says Philip Eisler, vice-president and general manager for mobile and integrated business unit at ATI. And he points out that his company also makes chips that can be used to enhance Centrino's relatively limited graphics abilities. So, ATI could actually benefit from Centrino's success. It remains to be seen, however, whether that gain would more than offset sales lost to Intel's new bundle. Nvidia declined to comment.
At first, most notebook makers would likely install Centrino only in a few models, says Creative Strategies' Bajarin. Intel confirms that the package will cost more than a comparable stand-alone processor, and anything that drives up laptop makers' costs would be more than unwelcome, considering how thin their margins are already. However, any laptop maker that wants to build wireless-ready machines will have to spring for some extra cost, either for the additional separate wireless chip or for a Centrino bundle.
SPREADING THE GOSPEL
Still, Intel's Chandrasekher claims initial orders for Centrino already exceed by three or four times what Pentium 4 Mobile got when it came out in March, 2002. This March, PC maker Gateway will begin outfitting some of its most popular laptops with Centrino. And by yearend, more than half of its notebooks will have Centrino inside, says Mike Stinson, Gateway's general manager for mobile products. So far, most manufacturers seem pleased with the quality of Intel's chips, says Dean McCarron, founder of PC components consultancy Mercury Research in Cave Creek, Ariz.
The adoption of the Centrino brand could take a while, as Intel spreads its new, speed-isn't-everything gospel to computer makers and consumers -- a message that rivals might actually welcome and help spread. With $10.8 billion in cash as of yearend 2002, though, Intel has all the time in the world. And it's betting that the wait will be worth it.
>> wished I listened to this one [GLW] rather than TMTA. <<
GLW is a great, old company that is successfully re-inventing itself, while TMTA is a hungry young company which has yet to establish much traction but has oodles of potential.. The only attributes the two companies share: both are tech companies and both had stock prices which were way below any reasonable interpretation of “fair value.”
GLW’s stock has now corrected to a level much closer to fair value, while TMTA’s has yet to do so. JMHO. Dew
OT GLW:
wbmw: you might want to look at the latest post on the GLW MB. Regards, Dew
>> GLW will go to zero along with NT, LUcy, WCOM and the rest. <<
Nicely done!! As of today’s close, GLW is up 216% since your doomsday prediction on 8/4/02.
P.S. wbmw: GLW is up 167% since you put GLW on your “watch list” on 10/28/02. Sometimes too much watching can be costly…
Nice bounce today (+18%):
However, the plug for GLW in Barron’s -- re the likelihood of new FCC policies going into effect this week -- is somewhat overstated, IMHO.
The Washington Post article referenced in post #98 is apropos.
>> Hail to the S. FUEHRER!!! <<
Even in a jocular context, that’s a bit over the edge, IMO.
If your intention is to assure that this message board remains irrelevant, I must admit that you are doing a fine job.
>> [wbmw to 119]: So you see people in the future using handheld devices that receive data from *personally dedicated* servers? I don't think so… I don't see any reason to change the networking infrastructure to support that kind of usage model. It makes more sense to continue to build off the current model and have servers send data to central hubs (hot spots in the wireless world), which would be responsible for establishing the connections that people use. <<
I think the distinction you cite is irrelevant. What is relevant is that, in either of the network models you and 119 present, huge processing power will not be needed in the user’s own device.
How quickly this new computing paradigm will materialize is open to debate. But a trend toward end-user devices with relatively modest processing power seems an inevitable consequence of the wireless-data buildout that is still in its infancy. Dew
>> To refer to remaining converts as a non-issue seems to me understate the current significance. <<
Possum: we do not have a bona fide difference of opinion here; it only seems that we do because of semantics.
We agree that the conversion process itself is winding down; the impact on the stock price you cite is from possible short-covering that is not related to the converts. The impact of this covering (whose timing is uncertain) may or may not be significant but, since it’s not connected to the converts, I consider it a separate issue. Regards, Dew
Amusing musings from a new poster on the Yahoo/TMTA MB. FWIW:
>>
The Six Fan Syndrome
by: johnk6g
Whenever I browse in a computer store, I always remark to the salesman that if one were to deduce the laws of physics from the structure of the typical PC case, it is clear that hot air falls.
I always get a quizzical look, and never a wry smile.
So now we have a cooling fan on the CPU, a fan on the front side bus, a fan on the ram, a fan on the 7200 hard drive, a fan on the AGP 4 video card, and a couple of case fans down low where they will allow the power supply to overheat and fry the MB.
Moore's law worked great for Intel as long as the cost of actually running the machine remained more or less constant. But now the power consumption of these chips is increasing geometrically with speed, and we have all of those non-productive heat movers inside the PC consuming additional power creating additional heat and noise.
And we have energy costs rising.
Not only do you pay an increasing power bill to run the PC, but a geometrically rising tab to run the office air conditioner to remove all the additional heat generated by that machine.
Intel's hotter-faster paradigm has slammed into the wall of economic reality.
Two things seem absolutely clear:
1. Businesses are going to demand fan free natural convection cooled machines (which shockingly enough, vent at the top) for the desktop like the NEC-Transmeta model to save on power consumption; and
2. Intel will not be able to abandon its hotter-faster business model.
As a lurker [on the Yahoo MB] contemplating when to acquire a stake in TMTA, I must say that the pressure is building. TMTA has been outperforming the NDX since October, and that is a long time. We have a cycle low due in May, as we play chicken with the opposing forces of a falling market and the ticking away of a silent countdown for liftoff.
<<
>> [To Usuck]: By the way, how does this [CSCO] relate to INTC? Not that it has to, but I'm just curious. <<
You can blame me for starting the thread by musing about the discrepancy in gross margin between CSCO and INTC. FWIW: I thought drjohn provided some good insights in #3964.
Re: Residual Impact of Preferred Offering:
First of all, only about $115M of the converts are still outstanding based on CFO Flaws’ statement that about 80% of the converts had already been converted [(0.2)($575M)=$155M]. This sounds about right because we know that $155M of the converts remained as of the 12/31/02 balance sheet.
If all of this $115M were converted at the $1.97/sh rate, it would produce about 58M common shares – hardly enough to worry about when GLW’s volume is around 10M shares per day.
Moreover, I expect that the effect of further conversion on the common will be far, far less than even 58M shares. That’s because a large portion of the converts has been held by arbs who shorted the common as a hedge when they bought the converts. When these folks convert, they will use the newly-issued common to cover their short positions without actually selling any common shares. (I.e., they have already sold the shares that will be produced by conversion.
Bottom line: the convertible issuance last August was severely disruptive to GLW’s common stock, but the disruption is behind us now. Going forward, the remaining converts are a non-issue. Regards, Dew
Washington Post article on FTTH:
http://www.washingtonpost.com/ac2/wp-dyn/A38106-2003Feb6?language=printer
[There is some info in this article to support what Wendell Weeks said at today’s webcast – and also plenty of material which contradicts his assertions regarding fiber-to-the-home --Dew].
>>
Copper Lines Regaining Luster
With the Obstacles to Fiber, Phone Companies Are Tapping the Old Infrastructure
By Jonathan Krim
Washington Post Staff Writer
Friday, February 7, 2003
For years, replacing the nation's copper telephone wires with fiber-optic cable has offered a promise of digital heaven: quick downloading of full-length movies from the Internet; phone companies offering television programming to compete with cable; two-way, interactive video for online gaming, education and medicine.
But the regional telephone giants also have warned that as long as they are required to lease those fiber networks to competitors, they will be unwilling to spend significant sums to build them.
Now, with the Federal Communications Commission ready to revamp its competition rules in the next two weeks, many telephony experts, financial analysts and some phone company officials say that even if the former Bell telephone companies get the regulatory relief they seek, fiber to people's homes will remain a far-off dream.
Not only does stringing fiber to the home remain enormously expensive, but advances in technology allow significantly faster connection speeds to be squeezed out of the country's 1.5 billion miles of existing copper lines.
Tests in engineering labs and in a handful of areas around the country are yielding Internet connection speeds five to 50 times as fast as what is now considered "broadband" digital-subscriber-line service offered over phone lines.
"I'm amazed and encouraged with what we can do with our copper network," said William L. Smith, chief technology officer of BellSouth Corp., the regional phone company in the Southeast. "I still want to have fiber to every home and every business, but there's a lot we can do with copper."
Industry giant Verizon Communications Inc., the dominant local phone provider from Maine to Virginia, has run engineering tests in which DSL speeds were increased from a maximum of 1.5 megabits per second to 7 megabits per second, without additional fiber. That would more than enable the video applications that many technology companies say would make broadband more attractive to consumers and jump-start the struggling sector.
Qwest Communications International Inc., which primarily serves the Rocky Mountain region, has for three years served a handful of communities with a full menu of television programming, equivalent to cable packages, over its copper lines using a technology known as VDSL (very-high-data-rate DSL).
"Copper is far from dead," said Steve Starliper, vice president of consumer product management for Qwest, which has 50,000 VDSL customers in Colorado and Arizona.
Although deploying VDSL requires extending fiber lines deeper into neighborhoods, that has cost Qwest far less than it would have had it dug up people's yards or driveways to pull fiber into their houses.
But such advances have drawn little notice in the debate in Washington as the FCC nears decisions on a variety of regulations that will govern telephone and broadband competition.
The former Bells and their supporters continue to press the case that easing their obligations to lease lines to other phone companies would put them on equal footing to compete against cable firms -- and is the key to unlocking investment in a fiber future.
"We cannot expect [the phone companies] to invest in and deploy new facilities when they are required to share such facilities with competitors at below-market prices," said a recent letter to the FCC signed by 22 members of the House of Representatives who support the former Bell companies' position. "While access to broadband services transmitted over copper loops has increased over the past several years, such services pale in comparison to the types of capabilities that consumers could enjoy if fiber accounted for a greater portion of so-called last-mile facilities."
Critics of the former Bells fear that changing the rules would stifle competition for local telephone service and high-speed Internet access, all in the interest of fiber upgrades that the big regional companies have little intention of making.
Some Wall Street analysts say FCC regulations have little to do with why the former Bell companies are not making capital expenditures.
"Myth 1: RBOC [phone company] spending is down because of the current regulatory environment" that discourages investment in upgrading their networks, wrote a team of telecommunications stock analysts at J.P. Morgan Chase & Co.
Instead, like most telecommunications companies, the former Bells binged on spending during the bubble years of the late 1990s, according to the analysts. They added that the companies' targets of spending a collective $19 billion this year is 10 percent less than what they spent in 1995, the year before Congress ordered their networks opened to competition.
Only when the phone companies' core economic picture improves will heavy investment resume, the analysts wrote.
FCC Chairman Michael K. Powell, who recently circulated proposed rules to the other four FCC commissioners, is seeking to ease requirements on the phone companies as part of his broad philosophy that the country needs to migrate to a digital platform.
"The phone companies are sitting on aging infrastructure," Powell said in a recent interview. "Copper wire will end its life."
Sources familiar with Powell's draft proposals say the rules would eliminate leasing obligations for fiber lines built to new residential or commercial developments, where there is no existing telephone service.
Less clear is what the FCC will decide in cases where fiber is driven deeper into neighborhoods before connecting with the copper wires that serve individual homes, or is strung to homes where copper service already exists.
The former Bells want any fiber upgrades to trigger regulatory relief, but sources say the commission is looking at maintaining some leasing obligations based on the extent of the upgrade. Under this scenario, the greater the upgrade to fiber, with corresponding increases in the speed of sending and receiving online transmissions, the lesser the sharing requirements would be.
Many telecommunications experts and industry executives agree that fiber to the home is broadband's Holy Grail, a "future-proof" technology that can offer speeds 100 times as fast as today's DSL and accommodate uses not even currently contemplated.
In the long run, pure fiber networks also are cheaper to operate and maintain than copper or fiber-copper marriages, because fewer switching terminals and other electronics are required. About 22,000 homes have fiber service.
But fiber to the home "is just economically not viable," said John M. Cioffi, a professor of engineering at Stanford University and one of the country's foremost experts on DSL technology. "Even if [the phone companies] had the money, the labor is exhaustive. Realistically, fiber could be a century away."
Cioffi contends that VDSL, a technology that has been around for years, is the only logical alternative. The challenge is to push fiber lines to within 3,000 to 4,000 feet of homes and then hook the copper wires from those houses into the fiber. In this way, Cioffi said, the cost of laying the fiber is shared by many customers. At that distance, speeds of 52 megabits per second are possible, Cioffi said, which is more than adequate for high-end video applications, including high-definition television.
In many cases, the fiber from the carrier's central facility to the neighborhood can be pulled through the same conduits that carry existing phone lines, minimizing additional trenching costs and disruption.
What VDSL provides is what many analysts say is an essential "triple play" of services for the phone companies: telephone, Internet and television programming. Otherwise, analysts say, cable firms -- which already provide Internet and television services -- will add telephone service and leave the former Bells in the dust.
The other regional phone companies have been watching Qwest's VDSL deployment closely but are not sold.
Christopher T. Rice, senior vice president for network planning and engineering at SBC Communications Inc., said his company has decided that pulling fiber all the way to the home is more cost efficient in the long run. But he said extensive stringing of fiber is at least 10 years away.
The former Bells say that any expansion of broadband capability is expensive and will be made based on cold calculations of demand for faster service and how quickly the investment will pay off.
In this challenging economic environment, they argue, every cost, including requirements to lease networks to competitors, must be factored in. They add that in places where their network facilities are so old that they need to be replaced, they are investing to make them capable of handling fiber.
Phone executives point out that even if they could flip a switch today and offer higher speeds to current DSL users, they would have to increase the cost to subscribers to cover the expense of using larger portions of the Internet "backbone," the central pipes that crisscross the country.
And consumers have yet to demonstrate a strong desire for higher speeds. Residential DSL and equivalent service provided over cable television lines rarely provide speeds over 1 megabit per second. And while such service is gaining traction with consumers, at $40 to $50 per month, only 13 percent of households have it.
"We're really focused on our existing DSL products to meet what customers are looking for now," said Peter Castleton, executive director of broadband products for Verizon.
Qwest offers its residential VDSL customers only two speeds, neither of which exceeds what is possible on DSL. Company officials said they are evaluating whether to extend VDSL to more neighborhoods.
Even Grande Communications in Texas, one of a handful of small companies that have strung fiber to residential areas, offers customers a top speed of 2.5 megabits per second, with slower speeds at lower prices.
State regulators, who set certain rules and rates and who oppose changes to the FCC's rules, worry that the former Bells are executing a well-honed strategy: Promise dazzling broadband networks in exchange for regulatory relief, then pull back.
In Pennsylvania, Bell Atlantic, which later became Verizon, promised state regulators in 1994 that over a 20-year period, it would deliver a broadband network capable of speeds of 45 megabits per second, according to public filings.
State public service commission officials say the company has deployed roughly 22 percent of what should be in operation. The commission is considering sanctions against the company.
In California, public service commissioner Loretta Lynch said that SBC and its predecessor, Pacific Bell, did little to deploy high-speed networks, even when they were economically flush.
The regional phone companies have been careful not to make promises. And some technology companies, desperate for broadband deployment to spur new spending and growth, say they understand the Bells' history with regulators.
Any telecommunications investment now is inherently risky, and the government needs to eliminate barriers to help make it more attractive, they say.
"Our support for this is not based on commitments," said Peter K. Pitsch, a lobbyist for Intel Corp. and an organizer of a coalition of technology companies urging the FCC to make changes -- though not to go as far as the former Bells would like. "It's based on the belief that they are more likely to do it if it's more attractive. . . . And in the longer term, they are going to want to do it. And have to do it."
<<
Further color: DC's income will be worth about .01-.015 per quarter to GLW's EPS.
Miscellaneous liquidity items:
[From today’s webcast]:
Next meeting with bond-rating agencies will be at end of Q1. (Rating upgrade then?)
GLW could access their *entire* $2B credit line without violating the 60% debt/capital covenant. However, the company has no plans to access this credit line because it is not expected to be needed.
Additional sources of cash in 2003:
--A tax refund of $185M in April 2003.
--$80M of dividend income from companies in which GLW has an equity stake.
--$50M balance from 3M from precision lens sale.
Dow Corning’s earnings will be recognized by GLW beginning in the *current* quarter:
http://biz.yahoo.com/bw/030207/72096_1.html
>>
[CFO] Flaws will also tell investors [during today’s webcast] that Corning plans to recognize equity earnings from Dow Corning, beginning in the first quarter. "However, our plan to return to profitability by the third quarter of this year is not dependent on Dow Corning earnings," Flaws will say.
<<
--
Since DC has annual sales of almost $3B and is solidly profitable, this is pretty big news for GLW, IMO.
One more comment about CSCO:
I’m not sure what it all means that two tech bellwethers – CSCO and INTC – are performing so differently during this nuclear winter for the technology sector.
It just amazes me that CSCO’s gross margin in the most recent quarter reached 70% -- the highest in the company’s history – while INTC’s gross margin hovers in the high 40s to low 50s. FWIW. Dew
>> Next, I'd like to see a comparison between the low voltage Centrino configurations and those from Transmeta. Might be pretty interesting. <<
Stay tuned…
>> Performance is better than a Pentium 4-M with 30% higher frequency, while battery life is 30-55% better in real world drainage tests. <<
Isn’t that pretty close to what you (and perhaps most investors) were expecting?
CSCO CC replay:
http://biz.yahoo.com/cc/2/26002.html
EP: I tried to explain in the message to wbmw:
http://www.investorshub.com/boards/read_msg.asp?message_id=736736
Maybe I didn’t do a very good job…
CSCO: Start with the fact that quarterly sales were slightly down Y-o-Y and yet quarterly profits were the highest in the company’s history:
http://biz.yahoo.com/rb/030204/tech_cisco_earns_8.html
“ ‘In what is probably the most challenging environment the information technology industry has ever faced, we are very pleased with our results in posting one of the best pro forma quarters in our history and the best GAAP quarter in terms of net income and earnings per share,’ said John Chambers, CEO…”
--
How did they do it? Instead of lowering their prices, they got their suppliers to lower their prices. And CSCO’s competitors in most of the company’s major markets are doing a disappearing act worthy of Houdini.
Despite all the above, I don’t own CSCO and don’t recommend it at the current price. It simply isn’t cheap enough, IMO. Dew
>> AMD has some steep swings due to how investors react to the hype. There is nothing wrong with taking advantage of that. <<
Nothing wrong with trying to make money in the stock of a bad company – I do it a lot. (No, I don’t mean TMTA.) My previous point was that debt-laden companies, by virtue of their financial leverage, can drop to near zero in a hurry if investors bid down the implied value of the enterprise itself. When you combine high operating leverage (high fixed costs) with high financial leverage (high debt relative to enterprise value), you get a multiplicative effect which creates enormous volatility.
>> I am also continuing to monitor TSM, as you suggested to me one time. But having said that I don't think right now is a good time to invest in anything. <<
I agree that it’s too soon to buy TSM. But despite the sickly broad market, I am fully invested, including a large allocation in tech and biotech. As a “bottom-up” investor, I find stocks which I consider worth owning (or shorting) regardless of the “macro” environment. FWIW. Dew