Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
AM EST Friday, October 6, 2006: Not too long ago,
Intel's stock was nearly $80. Now it's around $20.
There is only one reason for this abysmal performance. Intel has awful management.
It remains the world's largest one product company -- namely the chip for the
IBM (and now Apple) PC. Everything else it has tried has failed -- from video
conferencing to telecommunications and in between.
this is known. What you're about to read is not known.
years ago, I published a magazine called Computer Telephony. As editor,
I was very close to the pre-eminent supplier in that industry -- a company
called Dialogic Corporation. In 1999 computer telephony was hot. And Intel bought
Dialogic in 1999 for close to $1 billion. It proceeded to bury the company
within the gigantic Intel bureaucracy. Most of Dialogic's senior management
the Spring of this year, I was reading in the trade press that Intel was cleaning
house and divesting itself of various businesses it had bought over the years
and turned into drek -- also called Reverse Midas Touch. On June 27, 2006 Intel
announced it was selling its communications and application processor business
to Marvell Technology Group for $600 million. I knew that didn't include Dialogic.
I got to thinking. Maybe I could buy Dialogic? I contacted two of Dialogic's
original founders, who were now rich, semi-retired and bored, and said "Let's
buy Dialogic back." They loved the idea.
to start? Intel has over 100,000 employees. I started at Andy Bryant's office.
He is Intel's CFO. I never got to speak to him, nor his administrative assistant,
Debbie Ulmer, despite many attempts. The closest I got to talk to anyone in
Bryant's office was a secretary called Sheri Wysocki, who said "Send an
email and I'll pass it on." She received this email from me on July
5, 2006 (note the date).
that you would pass on our conversation and my email to Ms. Debbie Ulmer,
administrative assistant to Andy Bryant. I havent heard anything from
Ms. Ulmer. Here is copy of my early June email.
Dear Ms. Wysocki,
Thank you for
being so helpful.
Our group is
interested in what Intel has for potential sale in the telecom/communications/telephony
businesses. We understand from reading the financial press that you may be
contemplating the sale.
Never hearing anything, eventually I gave up on Andy Bryant's office. I scrounged
some more and eventually found a woman called Trina van Pelt, who carried the
title (I believe) of Senior Treasurer Manager in Intel Capital, the part of
Intel that does work in acquisitions and divestitures. She didn't return my
phone calls. But I begged her cell phone from someone (probably her secretary)
and actually reached her one day in July. I have notes suggesting it was July
blew me off. She said she couldn't discuss anything. There is no opportunity.
And she doesn't know when there might be. She promised to get in touch with
me if there was ever a deal. I sent her my contact information.
August 9, Intel released this:
Eicon Networks Corporation (Eicon) and Intel Corporation today
announced that they have signed an agreement for Intel to sell the assets
of its media and signaling business to Eicon.
is expected to allow Eicon to become a leading player in the media processing
and signaling market segment. The sale will enable Intel to focus its investments
on its core communications and embedded businesses, including Intel® Architecture
and network processors, modular communications platforms and optical modules.
The transaction is expected to close in approximately four to six weeks and
is subject to regulatory review and normal closing conditions. Financial terms
are not being disclosed.
end of this story came last night, eight weeks later, when I read the following
Quebec. Oct 4th, 2006 Eicon Networks Corporation (Eicon)
announced today that its acquisition of Intel Corporations Media and
Signaling business has been completed. Eicon also announced that it would
be proceeding to change its name to Dialogic Corporation.
"We got screwed,"
I emailed my friends last night: "Several things are evident:"
1. Intel was negotiating
to sell the business in a private deal precisely at the time I contacted them.
2. They did not handle the sale of Dialogic as a controlled auction. Had they,
they would gotten more bidders, the bidding would have been frenetic and Intel
would have sold Dialogic for a higher price. By not doing this, by doing a private
non-auction deal, they shortchanged their own shareholders.
3. Intel's management,
I'm guessing, dumped the whole Dialogic division at a bargain price just
to get it off their books and to cover their embarrassment at the mess they
had made of Dialogic since 1999. Otherwise why not reveal the price?
Am I annoyed that I didn't get a shot at this? You betcha.
Am I surprised that Intel shareholders got screwed? No. They've been screwed
for years. Nothing is new.
I praying for all the useless, rude, incompetent people I dealt with at Intel?
Yes. I'm praying they'll be among the 10,500 jobs that Intel announced in early
September they were eliminating. As
I said, Intel is among the more bureaucratic, make-no-decisions large companies
Life does go on.
Yesterday the financial press was speculating that Intel is about to buy the
graphics chip maker Nvidia. The reasoning? Intel's talented, gutsy competitor
in PC and server chips, AMD recently bought the other graphics chip maker ATI.
If Intel does buy Nvidia, it will be a great boost to AMD. Intel will screw
up Nvidia just like they screwed up Dialogic and all the other companies they
bought in the past 20-30 years in their lame (but failed) attempts at diversification
from that wonderful PC chip, recently called Pentium.
I thought long
and hard about publishing this Intel story, since it probably reads like sour
grapes. Frankly, I thought it was interesting. It's another reason not to buy
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first dumb blonde joke
Jack, a handsome man, walked into a sports bar around 9:58 pm. He sat down next
to this blonde at the bar and stared up at the TV. The 10:00 news was on. The
news crew was covering a story of a man on a ledge of a large building preparing
The blonde looked at Jack and said, "Do you think he'll jump?"
Jack says, "You know, I bet he will."
The blonde replied, "Well, I bet he won't."
Jack placed $30 on the bar and said, "You're on!"
Just as the blonde placed her money on the bar, the guy did a swan dive off
of the building, falling to his death.
The blonde was very upset and handed her $30 to Jack, saying, "Fair's fair.
Here's your money."
Jack replied, "I can't take your money, I saw this earlier on the 5 o'clock
news and I knew he would jump."
The blonde replies, "I did too; but I didn't think he'd do it again."
Jack took the money.....
second dumb blonde joke
A blonde was trying to sell her old car but
wasn't having any luck because the car had 250,000 miles on it.
One day, she mentioned
this to a friend. Her friend told her, "There is a way to make the car
easier to sell, but it's not legal."
matter," replied the blonde, "I've just gotta sell it."
said the friend. "Here is the address of a friend of mine. He owns a car
repair shop. Tell him I sent you and he will turn the odometer in your car back
to 50,000 miles. Then it should not be a problem to sell it."
weekend, the blonde made the trip to the mechanic. About one month after that,
her friend asked her, "Well, did you sell your car?"
replied the blonde, "why should I? It only has 50,000 miles on it!"
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
address is .
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