<THE DRIP PORTFOLIO>
Plus, Intel in the News
by Brian Graney (TMFPanic)
ALEXANDRIA, VA (May 28, 1999) -- It was a pretty quiet week for the Drip Port, with very little news out of our companies. Typing the tickers JNJ and MEL into the quote box at fool.com and rummaging for news (which has been expanded by the recent addition of stories from Reuters, by the way) yields nothing earth-shattering or even mildly thought-provoking from the past five days. That's fine with us -- the less we have to think about our stocks, the better.
The same cannot be said for Intel (Nasdaq: INTC), however, which seems to be a daily business news staple the way Monica Lewinsky is a constant in the gossip pages of The Washington Post. Reporters can't seem to get enough of this company, and we can't say we blame them. We think Intel is one of the most fascinating companies out there for investors, both in terms of what it does, what it's going to do, and how well it manages to do what it does. We could probably write about this company every day for a year without running out of new things to say. (Don't hold your breath.)
The most widely-reported news out of the Santa Clara, California-based chip giant this week was its $200 million investment in the Williams Communications unit of Williams (NYSE: WMB) on Tuesday. Williams is an interesting story for those investors who may never have heard of the company. The firm operates 27,000 miles of natural gas pipelines in the U.S. and has used the rights-of-way related to those pipelines to construct a 19,000 route-mile fiber optic communications network. That network will be used by Intel to link and serve its forthcoming Internet data services centers, providing the roadways for what Jeff has dubbed "The Intelnet."
Internet data centers may very well define the Intel of the future, but the Intel of today is still very much the top dog in the microprocessor market. To maintain that position, Intel will be relying on a new generation of microprocessor architecture, replacing the 32-bit instruction set used in all of its chips on the market today with a new 64-bit architecture referred to as IA-64. On Wednesday, Intel and development partner Hewlett-Packard (NYSE: HWP) unveiled the new IA-64 architecture, giving software engineers some lead time to design 64-bit-based workstation and server applications before the first IA-64 chip, known as Merced, goes into production in the middle of next year. To read more about IA-64 straight from the horse's mouth, click here.
While Merced is the buzzword that gets kicked around the most when the press talks about upcoming Intel products, the emphasis on that chip alone is a bit overblown. The real story here is the IA-64 architecture itself. As Intel shows in this chip roadmap, the performance difference between Merced and Intel's top-of-the-line 32-bit processors could be virtually nil when Merced is launched next year. The real impact of the switcheroo to the 64-bit architecture will most likely be felt in 2001, when an Intel chip code-named McKinley is supposed to set the world on fire. (Don't you just love these code-names? Maybe Austin Powers is freelancing at Intel in between movies.)
We're not going to start jumping up and down about McKinley just yet, even though the chip might end up being twice as fast as Merced. Considering that a new semiconductor can be hailed as better than sliced bread one month and as outdated as a dinosaur the next, don't be surprised if another code-named chip knocks McKinley off the "next best thing" pedestal sometime soon. By next year, McKinley might be as forgotten in investors' minds as the Republican President with whom it shares its name. Time will tell.
Not surprisingly, the most under-reported news out of Intel this week came on Monday, when the company said it will join Microsoft (Nasdaq: MSFT) and Hewlett-Packard in backing a summer course called "Applying Computers in Education" for teachers in District of Columbia Public Schools. After learning how to integrate computers and the Internet into their curriculums, each of the 200 D.C. secondary teachers in the program will receive a 400 MHz Celeron-based PC, a bundle of Microsoft software, and an H-P scanner to use in their classrooms next year. Now that's Foolish!
Touchstone Friday: On Monday, Jeff asked the question "Are you Foolish?" and shared his thoughts on what being a Fool means to him. Tuesday saw a cameo appearance by TMF Selena in the Drip Port, who skillfully underscored the importance of focusing on quality and price when examining potential investments. George diplomatically provided a discussion of foreign companies on Wednesday, and Jeff chimed in again on Thursday with some thoughts on why we like to keep things focused around here.
While the Memorial Day weenies are cooking this weekend, take a few minutes to read this week's columns, if you haven't already. Jeff is high-tailing it to the beach tomorrow to soak up the sun before the legions of graduating high school seniors get there and mess everything up (what a grouch). But before he goes, he will send this month's $100 check to Mellon Bank. Next month, we'll probably split our contribution between J&J and Intel, for those of you keeping score at home.
Have a great holiday weekend!
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