Intel comes home, means business

SANTA CLARA, Calif. -- Blunt talk combined with a rosy forecast from its senior executives sent Intel Corp.

SANTA CLARA, Calif. -- Blunt talk combined with a rosy forecast from its senior executives sent Intel Corp.'s stock up nearly $4 on Friday.

And it was none too soon. Intel's shares had dropped more than 20 points and 20 percent in the last month amid worries about falling margins and slowing sales.

"The theme as we go forward in this market is segmentation," said Andrew Grove, chairman and CEO in a presentation delivered to analysts.

Intel executives repeatedly returned to the theme of segmentation, which looms as a central theme for the company in the fourth quarter and beyond. Intel plans to branch out into more consumer applications, while pushing into high-performance applications in the workplace.

"In the past, we never differentiated our product offerings," said Craig Barrett, president and chief operating officer of Intel. "We are now developing multiple products for multiple segments."

Many of the 300 analysts who listened to Grove, Barrett, and four other Intel officials liked what they heard.

"The short-term market plan is good," said Joe Moore, a vice president with investment firm Goldman Sachs & Co. "They are upbeat about the European market and they are prepared for slow sales in Asia." Europe and Asia -- especially Japan -- have seen slowdowns in demand for Intel processors in the past.

But Moore added that other aspects of the Intel plan raised doubts. "Their plans for the sub-$1,000 PC market are interesting, to say the least," he said.

Other Intel watchers were even more doubtful about Intel's strategy to claim market share by replacing specific chips with software programs.

"There is no real advantage in replacing a $25 MPEG chip with a $400 Intel microprocessor," said Gerry Kaufhold, senior multimedia analyst with computer industry watcher In-Stat. "If you look at what goes into a DVD player, the entire silicon content is about half of cost of an Intel chip."

But, even Kaufhold admits that Intel is a force in the nascent market. "Everyone that is using a computer knows about Intel," he said. "That's a big advantage."

Also:Inventory correction over


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