An interesting piece on the US news site Marketwatch by Douglas McIntyre, argues that "Intel's main business has not evolved much since Noyce died." Bob Noyce, co-inventor of the IC, co-founded both Fairchild Semiconductor and Intel, and was the founding CEO of both companies. He died in 1990.
"After 1990, management did make the company bigger but this has not really done much for shareholders. Intel's operating income was no better in 2007 than it was in 1998", writes McIntyre.
"Most of what Intel did from the mid-1990s to 2005 was a bust", says McIntyre, "from 1998 to 2001, the company's operating income fell by over two-thirds."
"Clever and misguided plans had broken the watch that Noyce made and it cost the shareholders plenty," continues McIntyre, "as astonishing as it may seem, Intel's shares trade where they did ten years ago. For all the revenue the company has piled on in the last five years, increasing 43% to $38.3 billion, the results for shareholders have not even been modest."
"Otellini . . .would not recognize Noyce on sight nor would he understand how Noyce made his bones in the industry", writes McIntyre, "Otellini's dream of the future is that Intel will have success marketing chips for internet-enabled devices which are smaller than a PC but bigger than a cell phone handset. Otellini's market is a mirage, but Intel will spend itself into exhaustion pursuing it."
"Intel already knows that this kind of diversification rarely works", concludes McIntyre, "but, it is still betting on the horse least likely to finish first in the name of making the company larger."
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Comments (1)
The referenced article is interesting, although it ignores the co-inventor of the IC, the late Jack Kilby, and omits the initial product area of Intel, the DRAM business. The semiconductor business has thrived largely as an engineering-driven business, and heavily marketing-oriented companies have not done well, unlike in so many other industries (food, soap and automobiles come to mind). Perhaps this happy-time for engineers like me is coming to an end. Retirement is looking more attractive!
Posted by Peter B | July 23, 2008 7:28 PM
Posted on July 23, 2008 19:28