Education & Distance Learning Enthusiasts- Intel continues spree of acquisitions, holdings - One Touch Systems, CMG Information Services - Company Business and Marketing

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Intel continues spree of acquisitions, holdings - One Touch Systems, CMG Information Services - Company Business and Marketing - Brief Article

Electronic News - December 15, 1997

Santa Clara, Calif.--Intel continues on a buying binge, having recently bought stakes in the following companies: One Touch Systems, a maker of interactive broadcast technology; bought a 4.9 percent stake in Internet communications company CMG Information, and previously acquired multiprocessor module vendor Corollary.

Although the pace of Intel's acquisitions and venture capital investments is speeding up, the company still insists that its primary motive in amassing this portfolio is to grow the market, not to generate profits. But the company's acquisition strategy indicates Intel is reaching into new areas with its investments.

One strong indicator is the value of these investments, which now total more than $500 million, according to recent estimates. This amounts to about 2 percent of the company's current earnings based on recently released figures showing revenues of $6.2 billion for the third quarter.

"The overall objective hasn't changed over the last year. The strategic framework is to create new uses for our microprocessors and support our manufacturing," said Intel corporate spokesman Tom Waldrop. Commenting on the fact that the pace of investment has picked up, Mr. Waldrop said that investment is being driven by emerging technologies.

"The rate at which we are making investments is accelerating. Every one of our investments in one way or another supports some strategic initiative." The company is making investments at such a rapid rate, he noted, that even he can't keep up with the pace. "I don't know how many there are. There could be new ones."

Intel is still being investigated by the Federal Trade Commission, however, a factor that doesn't seem to have put a damper on its investment and acquisition appetite. The agency, which is conducting a broad inquiry into Intel's business practices, is expected to seek examples of anticompetitive actions by Intel that point to any tendencies toward monopoly. Although the pace of Intel's investments and acquisitions has actually accelerated since the FTC announced its investigation earlier this year (EN, Sept. 29), Intel says its strategic objectives have remained the same.

Intel is currently targeting the visual computing and server markets that will be the initial targets of high-performance MPUs such as the forthcoming Merced processor being designed by Intel and its partner Hewlett-Packard. "In the last couple of years or so visual computing has become a real watchword for us. It will drive PC growth in the future, particularly demand for higher performing microprocessors versus existing levels of performance. So visual computing is one of our strategic thrusts.

To that end, Intel last week announced it has made an equity investment in One Touch Systems, an interactive distance learning company with more than 100,000 seats installed.

"Gerald Holshammer, GM, Intel Internet and Media Architecture Labs, commented, "We are excited by the potential of distance learning as an application for the visual connected business PC. Building on our technology, One Touch is now able to deliver the same interactive content to corporate PC desktops as it has already been delivering to satellite-enabled classrooms."

Another area of intense interest to Intel is broadband communications. "We think it's very important to have wide availability of residential broadband communications to help increase the value of home PCs going forward," Mr. Waldrop said. "For example, you recently saw investments from us in Covad (EN, Dec. 8), which has some ex-Intel employees in the area of DSL (digital subscriber line)." Charles McMinn, Chuck Haas and Dhruv Khanna have formed Covad to enable communications over plain old copper telephone lines. Intel is Covad's first customer.

Other areas of interest for Intel are in broadband telephone, broadband cable and satellite. "High speed networking is yet another. We've had acquisitions in the networking area, and electronic commerce is another area," Mr. Waldrop said.

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