Showing posts with label Intel. Show all posts
Showing posts with label Intel. Show all posts

Tuesday, May 07, 2013

International

Intel: change of guard

Otellini’s successor to come into a hard landing

The Paul Otellini era at Intel Corp is drawing to a close. Intel’s legendary CEO will call it a day in May 2013, after working for an astounding 40 years in the service of the world’s largest chip maker. The news came as a shocker, as Otellini, 62, surprised the tech community by announcing to retire three years before Intel’s mandatory retirement age. He has had a stellar record at the helm of Intel since 2005. Intel’s revenue increased by 57% to reach $55 billion at the end of 2011. He also settled an antitrust suit against Intel for $1.25 billion, and went on to convince Apple to put Intel chips in its computers.

Otellini will hand over the baton to a new incumbent at a critical juncture in the company’s 44-year-old history. Until not very long ago Intel strode the tech world like a collossus, enjoying over 80% share of the global market in computer chips and processors. But those days of glory are now a fading memory as new rivals and upstarts such as Qualcomm and ARM Holdings have eaten into the turf that was once Intel’s happy hunting ground. The company also found itself turning up late for the party as new players made rapid gains by moving in fast and capitalising on the big shift towards mobile devices.

The Intel board has begun its search in earnest for a worthy successor who can turn around the flagging fortunes of a company beset by an eroding market share and falling PC sales. Last month Intel’s Q3 net income fell by more than 14% to $3 billion on falling PC sales (its core competence area). According to market research firm Gartner, PC sales fell flat for the seventh quarter in a row during the second half of 2012 and the outlook for the future doen’t look bright either. Will Otellini’s successor be able to step up to the plate and revive Intel’s business in these challenging times?

HP: DEAL gone sour


Autonomy deal blows up in the face

Bad luck seems to have become a constant companion of the US technology major Hewlett-Packard (HP). The latest downer is it’s purchase of Autonomy, a British software company, for a whopping $11 billion last year. How HP, an old warhorse of the tech race, could have been so naive to jump at a deal, which had disaster written all over it from the word go? Autonomy’s numbers were fishy to begin with. Its stated profit margins of around 50% did not seem to translate proportionately into cash flow and its claim of double-digit organic growth in software license revenue appeared too good to be true. And despite being warned by analysts that it was forking out too high a price for the acquisition, the computer maker went ahead with the deal. Not surprising that it has now unravelled with destructive force leaving behind a toxic trail of accounting rigmarole. HP is now engaged in salvaging the situation and limiting its damages. The company has written down $8.8bn in the value of the deal. It has also fessed up to “serious” accounting improprieties at the British company. However, it will take some time before HP is able to clean up the mess and leave the stink behind.


Source : IIPM Editorial, 2013.
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Thursday, October 18, 2012

Land of the up‘set’ Sun

Sun must ideally go back to the negotiating table with IBM; it will be tough for it to survive on its own

If they are still part of the game 8 years later, Sun Microsystem's shareholders deserve a special reward for their patience. Or may be they need to undergo a detailed medical check up to assess the level of their sanity. They have seen the company's management perform miraculous deeds in these years. A stock that traded at around $250 in those days of the dotcom boom now trades at a pathetic $6.42 (as on April 13). It isn't a cake walk to achieve such numbers!

Not that shareholders are always napping though. Sun's stock dropped by a precipitous 23% on April 6, when talks with IBM for acquisition of the company (for a price of around $7 billion) were reported to have collapsed. It shows that IBM was a hope that shareholders were desperately latching on to, a hope that seems to be fading away now. There are a few smiling faces of course; in companies like Intel, HP and Dell, which would have found the going tough if IBM would have successfully taken over Sun.

More interestingly, the old guard seems to have come back into the reckoning. Current CEO Jonathan Schwartz was apparently in support for the deal while the founder, previous CEO and current Chairman Scott McNealy was against it. Speculation is that Schwartz may exit from the company now. Schwartz seems to be on borrowed time already. His strategy to make the company lead in open source hasn't yet paid off, and this deal was a ray of hope for him too.

Sun and IBM had been in talks for holy matrimony for over three months now but it is being said that the deal has been called off because there were differences with regard to the settlement price and some other terms of the agreement. For instance, Sun was reportedly eager that IBM staunchly go ahead with the deal even if the regulatory challenge over monopoly charges gets stiffer. “The reason for this deal not materialising could be the result of IBM not getting blown away in the deal heat and making a prudent decision in these tough times,” informs technology analyst Rob Enderle. Many analysts feel that Sun is making the same mistake that Yahoo! made about 14 months ago. As a coincidence, founders played spoilsport in both instances.


Source : IIPM Editorial, 2012.

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