Drip
Portfolio Report
Tuesday, February 24, 1998
by Jeff Fischer
([email protected])
ALEXANDRIA, VA (Feb. 24, 1998) -- Johnson & Johnson's new high couldn't help us beat the market today. We'll take a look at J&J's 1997 performance next, after we finish our current look at Intel this week.
Today, we'll consider some of the products aside from microprocessors that are sold by Intel (Nasdaq: INTC). Now is especially a good time to read about Intel's networking products. The company is now holding its networking symposium in San Francisco, and concurrently it's announcing several new networking products and goals. Some of the news is enough to keep 3Com (Nasdaq: COMS) shareholders nervous, while all told, the news is enough to make anyone wonder what sort of market (and profit margins) will remain in low-end computer networking products five years from now.
Intel is interested in making computer networking inexpensive, fast, and easy. Everything that Intel does has been in some way related to selling more CPUs (which is why making networking fast and inexpensive helps Intel on several levels), but the company is being less humble of late in its networking goals. Its growing network division is selling solutions that work for the small home user all the way up to the enterprise customer. Intel is aiming to become an end-to-end supplier.
In networking, Intel sells hubs, routers, adapters, print servers, virus protection software, and desktop and server management software. On Monday the company announced new networking products introduced by Compaq Computer (NYSE: CPQ) under a deal that Compaq has with Intel. Eventually, as we wrote last fall, Intel could put network interface cards (NICs) on the motherboard and put 3Com (which derives about 40% of its revenue from NICs) between a rock and a hard place. Even before doing so, though, Compaq and Intel's new driver compatible NIC is sure to be a relatively inexpensive solution that will pressure 3Com, just as Intel's lower-priced NICs have pressured 3Com in the past.
Intel has the immeasurable power of "owning" the motherboard, so it can make everything work together efficiently and even seamlessly, beginning from the beginning -- the brain of the computer -- and causing buyers to ask, "Well, why slap on other companies' products when Intel is offering the full package in a rather seamless configuration?" Especially when it comes to low-end network products.
Being a day devoted to networking, it makes sense to (instead of rambling on and trying to summarize dozens of articles) send you on your merry way, out wandering across the largest living network itself, the Internet. Intel has issued several press releases on its networking business in the last two days, and all of them are available on the Web. The company also created a special page on its website for its current Networking Event. Give that a read if you're interested. Intel also lists all of its current networking products in those pages. Intel's website is impressive, and offers a great deal of information for investors. Next, here's a link to a new story on Intel's Enterprise Push. Finally, our Intel message board is one of the most active on the Fool.
For now, in summary, suffice it to say that Intel is working to sell an end-to-end solution in networking. Could someone argue that this is outside of Intel's realm of expertise? Some might argue that. But I wouldn't. Intel's mission is "...to be the preeminent building block supplier to the new computing industry worldwide."
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