Technology Investor 

Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM Tuesday, January 3, 2006: Likely investment trends of 2006:

1. Too much money chasing too few opportunities, especially in the United States. This means real estate profitability continues its declining yield Good time to sell real estate. Not so good to buy it.

2. Overseas has a shortage of capital and thus higher returns. In 2005, overseas markets did much, much better than ours. They will again in 2006. You got to have money overseas.

3. China, India and many other small countries, like Russia, Chile and Brazil, will continue to boom. They will consume more and more of the world's commodities. Prices of commodities will continue to rise. But no one knows which ones. That's why baskets of commodities make sense.

4. The companies which will do well will apply technology to their business. See VistaPrint (VPRT) below. Companies that make the technology, in general, won't do well. Prices are falling too fast. And the bureacracy at companies like Intel and Microsoft is overwhelming.

5. Speed is of essence -- even more so than usual. Change has never been faster. Eternal vigilance is key. The world suddenly got the message that there was no future in print. Newspaper stocks plummeted in 2005. Ditto for GM and Ford. Once they started cratering, you had to get out -- FAST.

6. Allocation remains the ONLY free lunch. But you got to keep looking. There's no single source to shop for "allocation." Most stockbrokers are useless. This year real estate will be a smaller portion of your portfolio -- but overseas and commodities will be bigger.

7. Move on. Don't berate yourself for lost opportunities. Because of the speed of change, you have little chance of always being right, or even being right often. You'll miss big moves. Your own business with control over it yourself still makes the most sense. Without that, at least organize your investing life in a disciplined way -- so many hours per week. Stringent stop losses, etc.

Intel is destroying itself for dubious benefit. The new CEO is called Paul Otellini. I have been long been an Intel customer, eagerly awaiting and eagerly buying the newest laptop power by Intel's latest and greatest microprocessor. Now, Mr. Otellini tells me he's no longer interested in me. He's going to take Intel into fields he and Intel have zero experience in. This will fail. Trust me.

BusinessWeek did a big cover piece on Intel's plans. The part that got me was the interview with Otellini. Read this stuff. Try to avoid throwing up. I've watched Intel over the years waste hundreds and hundreds of millions on hot new areas -- like videoconferencing and computer telephony. All have come to naught. I have a drawerful of Intel teleconferencing devices. They have now dropped the fabulous tagline "Intel Inside" for "Leap Ahead." Dumb. Dumb. Dumb. Here's the interview:

BW: Is it fair to say Intel is exiting the PC era and morphing into something new?
The era we're going into now is one where computing becomes more ubiquitous and more pervasive and has more uses, so computers are going to become tailored. The product lines and markets we're addressing today are all focused on where we think computing is headed in the next four or five years.

Clearly, a lot of what you're focusing on is marketing. Why is that so important?
We are still a technology company. We spend a lot more on R&D than we do on marketing. But to sell technology now, you have to do it in a simpler way. You can't talk about bits and bytes -- you talk about what it does for you.

Some people might think it's crazy to tinker with one of the most widely recognizable brands in the world.
Changing the name of our products goes a long way to put an exclamation point on the design change that's behind them. Is it orthodox to walk away from one of the most recognized brand names in the world? Probably not. I don't think we'll walk away from it overnight. In fact, we will keep it on in a large manner for quite some time. But the new brand at the top, in terms of where we want to drive the product, is going to be focused on [the new brand] Core, Core Duo in particular, which signifies the dual-core nature of it and also the fact that we have a whole new sheriff in town.

You've brought in an outsider, former Samsung marketing whiz Eric Kim, to help lead the marketing changes. Isn't it unusual for Intel to bring in outsiders at the top ranks?
It's hard to come in from the outside at that level at any company. At Intel, it's traditionally been even harder. But I thought we needed some fresh thinking. This is one of the areas where change is part of the nature of the job. The fact that Eric is a bigger geek than most of the other people at Intel turned out to be a wonderful blessing. He's a highly trained engineer, knows software in and out, worked Lotus. And he's also an aficionado. He's one of these guys that builds these home theaters himself and connects things up, so he's a great litmus test for how this stuff works.

You're also bringing in key execs in other senior-level positions.
As we move into emerging markets, you tend to buy a more experienced talent base. I felt in Digital Home boss Don [McDonald's] case that it was particularly important to get people who had worked in consumer electronics and content before. Those kind of skill sets didn't exist inside Intel. In Mobility Group boss Sean [Maloney's] case, wireless technologies is an area where we're still growing and learning. Those guys are like living gods, and you want to get the best and the brightest.

These are some pretty cherished institutions you're dropping -- the Pentium brand, the dropped "e" in the logo. How much trepidation did you feel?
When Eric asked me if I had any sacred cows, I said no. He asked, what around the dropped "e"? And I said if it makes sense, it's time to do it. He was given pretty free rein to change. And when I saw [the new logo], it just jumped out at me. It reflected that change, where we want to go. There's a feeling of movement around [the new logo], and the tag line "Leap Ahead" certainly reiterates that.

How much of this is in response to the competition you face? Advanced Micro Devices (AMD ) is stronger, and Texas Instruments (TXN ) is pursuing its own digital-home strategy.
We were certainly cognizant of our competition when we constructed [out new strategy], but I think it's sustainable from both a competitive and a market perspective. At the end of the day, the market is what drives our business model.

Tell me about the Apple (AAPL) relationship. You struck the deal in June for them to use Intel chips, which was something of a coup. What does that mean for Intel?
At the end of the day, we live to sell chips. First and foremost, it's market-expanding for us. Secondly, as I said at the developers' forum, the thing that Apple really brings to the Intel family of customers is their innovation. They [have an] ability to not just mix hardware and software, which is unique, but also to drop software upgrades rather frequently to take advantage of hardware changes. I think what [Apple CEO] Steve [Jobs] said at the forum is they've dropped five releases of the operating system in the last four years. That alone is very appealing. [When it comes to design], they are a front-runner -- people copy some of their design elements. I believe as they start taking advantage of some of our lower-power will drive a trend toward smaller, cheaper, cooler.

How hard was all this change for you as a lifelong Intel man?
I'm quite convinced this direction is the right thing for our company and, to some extent, the industry. This really is a natural evolution of not where just Moore's Law takes us, but also where computing has to go. This is the right model. Now, it's just a matter of playing it out.

What's your slogan going to be? Andy Grove, of course, will be known forever for "Only the Paranoid Survive."
He wrote that after he was in the job five or six years. [Otellini laughs.] Come back to me then.

Which technologies, platforms, most excite you personally?
I actually think Viiv is a world changer. Independent of the hardware as it evolves, it's DRM-agnostic, but it protects everything. It allows you to move things in a free fashion, but still maintain the desire of the content owners to get paid for what they do. It will change the business models of entertainment and theaters and Hollywood, and it will be for the benefit of consumers.

My favorite skiing photo:

Too much skiing, I guess. This young lady slept the entire way from Denver to New York. She paid extra for those tattered jeans.

Vistaprint, going higher?
I talked about VisaPrint as a great place to get business cards. I love it. Then it went public. And its stock started to rise, more and more. Its business model is so good, I bet it will rise further.

Go to and order yourself or your company some stationery. You'll be impressed how brilliant VisaPrint's system is.

Heartburn after a big meal? Sleep on your left side or your back.

SAT test answers:
The following questions and answers were collected from SAT tests given to 16 years-old students! One day our social security payments will depend on these kids.

Q: Name the four seasons.
A: Salt, pepper, mustard and vinegar

Q: Explain one of the processes by which water can be made safe to drink.
A: Flirtation makes water safe to drink because it removes large pollutants like grit, sand, dead sheep and canoeists.

Q: How is dew formed?
A: The sun shines down on the leaves and makes them perspire.

Q: What causes the tides in the ocean?
A: The tides are a fight between the Earth and the Moon. All water tends to flow toward the moon because there is no water on the moon and nature abhors a vacuum. I forget where the sun joins in this fight.

Q: In a democratic society, how important are elections?
A: Very important. Sex can only happen when a male gets an election.

Q: What are steroids?
A: Things for keeping carpets on the stairs.

Q: What happens to your body as you age?
A: When you get old, so do your bowels and you get intercontinental.

Q: What happens to a boy when he reaches puberty?
A: He says good-bye to his boyhood and looks forward to adultery.

Q: Name a major disease associated with cigarettes.
A: Premature death.

Q: How can you delay milk turning sour?
A: Keep it in the cow.

Q: What is the Fibula?
A: A small lie.

Q: What does"varicose" mean?
A: Nearby.

Q: What is the most common form of birth control?
A: Most people prevent contraption by wearing a condominium.

Q: Give the meaning of the term "Caesarian Section"
A. The caesarian section is a district in Rome.

Q: What is a seizure?
A: A Roman Emperor.

Q: What does the word "benign" mean?
A: Benign is what you will be after you be eight.

Q: What is a turbine?
A: Something an Arab wears on his head.

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

Harry Newton

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 . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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