Intel chief sweet-talks investors
With his company's stock dropping 21 percent over the last two weeks, Intel Corp. Chairman and CEO Andrew Grove went on the offensive Wednesday during a conference call with Charles Schwab customers.
"Our stock price has never gone in a straight line," said Grove during the call. "It has always had its up and downs. We are continuing to try to get the fundamentals right." Grove spoke at a Charles Schwab Investor Forum from Intel's Santa Clara, Calif., headquarters.
In the last two weeks, Intel's stock has plummeted about $20 -- 21 percent -- to close at $74.62 Wednesday.
Grove made it clear he feels his company, the world's largest chip maker, is not headed for hard times. He identified the Internet and the growing segmentation of the computer industry into new low- and high-end markets as powerful trends in the market -- and said Intel is ready to lead the charge.
"We are a big company," he said. "We have 12,000 people in R&D at Intel. We are one of the few companies that can say we're going to play in all the segments of the market."
According to Grove, the growth of the Internet is going to redefine how things outside of the computer industry are done. And Intel intends to branch out into those areas.
"We have been reshaping ourselves to take advantage of these changes," he said. "(We) are tuning our product offerings for each of these." Big markets include entertainment, electronic commerce, and multimedia creation, and Intel's Visual Computing Initiative -- which aims to incorporate an array of graphics capabilities into everyday computing -- encompasses two of those.
"We are playing in areas such as high-performance servers on one end, and low-cost video games on the other," he continued.
Yet investors and industry analysts have expressed concern over the effect of the recent surge in sub-$1,000 PC sales on Intel's profits. According to market study group Computer Intelligence, more than 40 percent of the PCs sold in August and September were sub-$1,000 computers. That potentially hurts Intel, because the company makes higher margins selling state-of-the-art chips that go into more expensive machines.
Grove, however, spun the question with an Intel perspective. "You can get PCs for a low price," he argued, "but the question is, what can they do?" He maintained that people looking to run "modern" applications will turn to Intel's mainstream processors.