Tail Between Legs, Intel May Exit Comm Business
After years of investing in communications businesses as a way to diversify from its core microprocessor business, Intel (INTC - Annual Report) is now reportedly giving up and selling them.
The chip giant has put much of its communications business up for sale, according to a report in the San Jose Mercury News, which attributes the information to sources who have seen documents describing the businesses that Intel plans to sell….
And while Intel has invested more than $10 billion in its entire collection of communications businesses over the last decade, according to the report, many of those businesses have lost money, and what’s more, they are no longer worth what Intel paid for them.
Intel’s leadership in personal computers sustained the company for nearly two decades. Then, as PC growth began to slow the company looked farther afield to try and position itself for another growth stage. Lacking experience in communications, where analog expertise is essential, the company was never able to get far. And the efforts caused Intel to take it’s eye off the PC ball, partially causing its current share loss to Advanced Micro Devices (AMD - Annual Report).
There comes a point in every company’s life that it transitions from growth to maturity. Most do so awkwardly, as Intel has done. Perhaps it is the enterprise version of puberty. In hindsight it is easy to say Intel should have given the money invested in communications to shareholders, or perhaps done some modest experiments to see if anything would take hold. But they didn’t, and now the transition is all the more difficult.
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