The End of Intel Capital?

Intel Capital is one of the longest standing corporate venture capital groups. It has operated through a couple of industry cycles now, avoiding the usual corporate venture “rule” that such things enter the industry at the top and exit at the bottom.

But is Intel Capital’s cycle about to end?

With AMD taking shark-bites out of Intel marketshare, and with PC industry growth declining, Intel CEO Paul Otellini has promised he will look at “anything with a bracket on it” — Intel’s money-losing business lines — as well as the company’s “all other” income statement line. Given that Intel Capital almost certainly must be losing money, and that hardly looks strategic in the currest cost-conscious climate in the company, how much longer can it be before the large and expensive venture group’s run comes to an end?

Related posts:

  1. Revenue Light at Intel
  2. Newbies Flood Venture Capital (Again)
  3. The Institutionalization of Venture Capital
  4. Pining for the Glory Days of Venture Capital
  5. John Kerry’s Misadventures in Venture Capital

Comments

  1. I can’t speak to the future of Intel Capital. They are viewed more as a catalyst for generating new businesses to consume intel silicon than as means of earning investment return. They may still play a role going forward.
    It’s the communication semiconductor group that is going to be spun out.
    http://www.nyquistcapital.com/2006/04/28/intels-communication-group-destiny-fulfilled/

  2. Bill Clark says:

    Isn’t the thrust of Intel Capital to free innovation which expands the market for processors? If so, Capital should endure, possibly limited to investements with high leverage.

  3. Stalin says:

    Yeah, look what happened to GE
    What a bunch of looozers!
    Lending Joe 6 Pack there hard earned cash that should have gone back to the investor

  4. Josh says:

    Can’t help thinking its high time. I knew “VCs” who did time for ICG back in the dotcom glory days. It always struck me as a slightly nebulous proposition, ie justify the ventures because it’ll somehow stimulate more demand for intel hdwre…From that point of view it seems that any investment could really have been considered legitmate…
    From what I’ve read, Intel is invoking the mandate of the early 80′s when they were getting hammered by the Japanese in whatever biz they were in pre-pentium cpu’s.
    While this kind of change is inevitable in Intel’s line of work (ala AG’s “only the paranoid survive”), a proactive reaction is not. Witness DEC, Wang, Compaq and, currently, Sun.
    Intel has the corporate DNA and track record to ditch the politics and turn the $120Billion ship in a new direction. Does anyone remember when they used to be in the digital watch business?

  5. Hey Paul, just wondering why you think Intel Capital almost certainly must be losing money?

  6. Hey Matt –
    Just a back of napkin sense:
    - 12-month trailing investments of $541mm.
    - Multi-office org with large headcount (>50, as I recall)
    - Poor exit environment
    If they’re not losing money on an operational basis, I’d be amazed.