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Intel to invest billions in renovating factories

Posted in Board Of Intellectual Capital, tagged , , , , , , , , on October 20, 2010| Leave a Comment »

Article from SF Gate.

“Intel Corp., the world’s biggest chipmaker, said it will spend between $6 billion and $8 billion on U.S. factory upgrades, spurring the creation of 800 to 1,000 manufacturing jobs.

Two plants in Chandler, Ariz., and two in Hillsboro, Ore., will be renovated, and a new research and development facility will be built, Intel said Tuesday in a statement. The plans will also create as many as 8,000 construction jobs, the company said. The initiative will be carried out over “several years,” Intel spokesman Tom Beermann said in an e-mail. The Oregon plant is to open in 2013.

Intel, based in Santa Clara, has manufacturing facilities at three sites in the United States, including New Mexico, as well as in Ireland and Israel. The company is also building its first production facility in China. Intel, which is vying with Samsung Electronics Co. to be the industry’s biggest spender on production, budgeted $5.2 billion for plants and equipment in 2010.

“Today’s announcement reflects the next tranche of the continued advancement of Moore’s Law and a further commitment to invest in the future of Intel and America,” Intel President and CEO Paul Otellini said.

Moore’s Law is Intel co-founder Gordon Moore‘s famous prediction in 1965 that computer chips’ performance will roughly double every two years as manufacturing technology improves and more transistors, or tiny on/off switches, can be crammed onto the chips. The other side of that prediction is that prices will also fall.

Semiconductor companies are locked in a race to shrink the line widths on the circuits that give computer chips their function. Intel’s budget will be spent on so-called 22-nanometer production. A nanometer is one billionth of a meter. Reducing line widths lowers costs and makes products more capable. Modern semiconductor plants cost hundreds of millions of dollars to construct and billions to equip with machinery. They run 24 hours a day, year-round.

Intel rose 2 cents to $19.21 in Nasdaq Stock Market trading. The shares have declined 5.8 percent this year.

The company’s microprocessors run more than 80 percent of the world’s personal computers. Rival Samsung is the biggest maker of memory chips. The two companies compete in the market for memory used in mobile products such as Apple’s iPad and iPhone.

Intel ended the third quarter with more than $20 billion in cash and short-term investments after generating $3.5 billion in cash flow from operations. That cash total doesn’t include the two pending acquisitions it announced in the period – the $7.68 billion purchase of McAfee Inc. and the $1.4 billion deal for Infineon Technologies AG‘s wireless-chip unit.”

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Intel to acquire McAfee in $7.68 billion deal

Posted in Board Of Intellectual Capital, tagged , , , , , , , , on August 20, 2010| Leave a Comment »

Here is some big news from SF Gate.

“Intel Corp., signaling its ambitions to expand beyond computers and into the booming market for mobile and Internet-connected devices, announced a deal Thursday to buy security software maker McAfee Inc. for $7.68 billion, the chipmaker’s biggest acquisition ever.

The surprise deal represents Intel’s bold move to position its chips, primarily its lower-powered mobile processors, as an attractive choice for the billions of coming Internet-connected devices, what some have termed the Internet of Things.

By integrating McAfee’s anti-virus software, the world’s biggest chipmaker hopes to create a product that addresses the potential security vulnerabilities created by countless wireless devices, appliances, cars, printers and ATM machines.

Paul Otellini, Intel’s president and CEO, said in a conference call that the Santa Clara company is looking to provide added security, which he called a third pillar of computing, after energy efficiency and connectivity. In the process, Intel is transforming from just a PC company to a broader computing company, he said.

“Our view is that everywhere we sell a microprocessor, there is an opportunity to sell security software with it,” he said.

The acquisition values McAfee, a leading security software firm also based in Santa Clara, at $48 a share. That is a 60 percent premium over its Wednesday closing price.

The deal also continues a streak of cash-rich Silicon Valley titans buying neighbors, following Oracle’s purchase of Sun and Hewlett-Packard‘s acquisition of Palm.

Intel said it would run McAfee as a subsidiary with its executive structure in place. David DeWalt, McAfee’s CEO, said he was excited about the prospect of teaming with Intel to tackle larger security challenges ahead.

“By becoming part of Intel Corp., we believe we can continue to create new and innovative security solutions,” said DeWalt.

Analysts’ reactions

Analysts greeted the news with mixed reactions. Some saw the wisdom of securing Internet-connected devices, which could hit an estimated 50 billion units in the next decade.

“If you look at the PC world, we have a stable stack and set of technologies like the operating system, middleware and antivirus software,” said Crawford Del Prete, an analyst with research firm IDC. “But when you think of connected devices, the stack doesn’t exist in the same way, and security will be a big problem for the billions of devices out there.”

The move will also help Intel compete against processors based on designs from ARM Holdings, which are found in virtually all cell phones and many electronic devices. ARM chips are preferred because they offer better power efficiency, but Intel’s move may help differentiate its chips by highlighting their built-in security protection.

Doubts about synergy

Other analysts, however, have questioned the strategy of buying McAfee, saying it is an expensive purchase and one whose synergies may be hard to realize.

Brian Marshall, an analyst with investment bank Gleacher & Co., said its unclear how much help McAfee can provide, with its strengths in selling packaged software for PCs. He said the business model for selling security for smaller and embedded devices is not established and may be challenging to monetize.

Symantec Corp., McAfee’s biggest rival, said in a statement that Intel might be too focused on securing individual devices when it should create a broader solution that addresses the multiple devices consumers will use.”

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Silicon Valley Gears Up for Acquisitions as Economy Improves

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , on April 12, 2010| Leave a Comment »

Here is some interresting news from Bloomberg.

“Silicon Valley companies looking to put their cash to work may drive a wave of mergers this year, bankers and venture capitalists say.

Companies are eager to make acquisitions because many of them have cut research budgets, says Robert Ackerman, founder and managing director of Allegis Capital in Palo Alto, California. That means they’re not as able to fall back on their own ingenuity to fuel growth. More businesses are relying on acquisitions to find their next new product or service, he says.

“The product cabinet is bare, but the market continues to move forward,” Ackerman said. “Wherever you see innovation sprint ahead, companies will have a product deficit, and will look to fill it.”

Google Inc., based in Mountain View, is currently one of California’s most acquisitive companies, buying at least five businesses in 2010. It agreed to buy Picnik Inc. last month, acquiring online photo-editing tools. Its purchase of DocVerse provided it with software that lets people share documents over the Internet. The value of the deals wasn’t disclosed.

The state’s largest single deal this year was Shiseido Co.’s purchase of San Francisco-based Bare Escentuals Inc. for about $1.7 billion.

California deal-making plummeted after 2007, when more than 2,670 transactions totaled almost $254 billion. So far this year, there have been about 530, worth $16.7 billion. That’s a higher number than in the first three months of 2009, although the value was greater in that year-ago period, at about $30 billion.

McAfee, Tibco

Local acquisition targets include Santa Clara’s McAfee Inc., Tibco Software Inc. in Palo Alto and Cupertino-based ArcSight Inc., according to Brent Thill, an analyst at UBS AG in San Francisco. McAfee and ArcSight both make programs that protect data, which could be more valuable as cyber threats mount. Tibco’s software helps programs of all kinds share information.

Goldman Sachs Group Inc. also cited San Francisco’s Salesforce.com Inc. and Palo Alto-based VMware Inc. as possibilities — though those companies aren’t the most likely targets, the firm says. Salesforce.com makes online customer- relationship software, while VMware sells so-called virtualization programs, which help computers run more than one operating system. Representatives from all the targets declined to comment or didn’t respond to messages.

Deal Volume

In Northern California, there were 45 deals involving venture-backed startups during the first three months of 2010, according to the National Venture Capital Association. That was the highest number in any quarter in at least five years.

More than 50 companies in California have at least $1 billion in cash and equivalents, which they could use for acquisitions. They’re led by a Bay area trio: San Francisco’s Wells Fargo & Co., with $68 billion; Cisco Systems Inc. in San Jose, with $39.6 billion; and Cupertino-based Apple Inc., with $24.8 billion, according to Bloomberg data.

“There’s a lot of cash on people’s balance sheets, so I think it’s a great time for startups,” said Kate Mitchell, managing director at Scale Venture Partners in Foster City, California. “They see that the faster, better, cheaper venture- backed companies are still growing, and they’re not spending on R&D, so they can be accretive.”

The value of deals in California topped out at $378.1 billion in 2000 during the Internet bubble, when there were more than 2,200 transactions. It took five years for the number of deals to surpass that earlier peak, and the dollar amount has never come close to recapturing the dot-com era’s glory.

Internet Bust

While the latest recession was the worst economic slump since the Great Depression, it actually wasn’t as devastating to California deal-making as the dot-com collapse. After having easy access to venture money and initial public offerings in the late-1990s and 2000, money dried up. The M&A industry hit bottom in 2002, when just 1,505 transactions accounted for $95.3 billion.

The deals crept back up over the next four years, peaking again in 2006 and early 2007. There were 665 in the first quarter of 2007, valued at $59.8 billion. That’s more than three times the number reported last quarter.

Tor Braham, head of technology mergers and acquisitions for Deutsche Bank AG in San Francisco, says mergers are ready to surge again for two reasons.

Pressure’s On?

“Private-equity funds have raised a lot of money before the financial crisis and there’s pressure on them to spend it before those commitments expire,” he said. Also: “Sellers want to get their deals done this year, before the expected increase in capital gains tax rate.”

Private-equity firms raised $538 billion in 2006 and $587 billion in 2007, just before the recession, according to the Private Equity Council in Washington. Capital-gains taxes, meanwhile, could rise above 20 percent for people earning more than $250,000 under budget proposals before Congress.

In the first quarter, Deutsche Bank advised Techwell Inc. in its $370 million takeover by Intersil Corp. The bank also worked with Nimsoft Inc. in its $350 million acquisition by CA Inc., and Francisco Partners on its sale of Numonyx BV to Micron Technology Inc. for about $1.3 billion.”

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