Monday, April 30, 2007

Catching up...

A few comments have come in on the last couple of posts that I wanted to address here rather than replying with additional comments. Someone wrote:

I think we're all hoping that the old growth rate and stock price will come back.

imo, it's just not going to happen for a couple of reasons. Intel now has a market cap of $126B and is in about the top 30 worldwide. There isn't a lot of headroom there. GE is #3 in market cap with $380B, but they are tremendously diversified relative to Intel. Microsoft is number #4 with $295B, but they don't have to pay for fabs. Fabs cost a lot of money, and they depreciate relatively quickly. Another reason is Intel's stock price during the .com boom was simply unreasonable for a manufacturing company. The market does what it does, but the stock price is at a more reasonable p/e ratio now than it was in 2000. I'd love to see stock back up to $30+ as well. It's going to take a lot more revenue to get it there.

There were some good comments about focal from the In the news II post. I encourage you to read those few comments if you haven't done so. They reflect the diversity of options about focal. One commenter said:

Focal pushes employees to do what will look good at focal, not what's good for the company.

There's no doubt that's true. But I'm not sure it's significantly different at other companies. People always tend to do what's best for them, whether it's sucking up to the boss, or spinning their work to look better than it is, or lying, cheating, and stealing to get ahead. Some people do these things at Intel, just like they do everywhere else.

I'll admit to being very conflicted about the focal process. As an employee, and especially as a manager, I find it an unpleasant experience to go through. Some dislike it less than I do, but I don't know anyone who looks forward to it. The idea of focal is (I think) to put some process and objectivity around an inherently subjective process. It's by no means perfect, and it can be painful, but overall I think it tends to work. It yields results that generally puts the higher performing people at the top, and the lower performing people at the bottom. Generally. Every time I've taking people through focal I've going into it worried about the outcome, and I come out feeling like it was relatively fair.

I really struggle with the idea of forced distributions. I believe this is done largely because most managers don't deal with poor performers. I see this every day. Too often people get swept into a bad category because of a forced distribution. But conversely, far too many poor performers would never be identified if managers weren't forced to do so.

One year I ended up representing three different groups in focal by myself. I don't remember the circumstances, but two other managers were not there to take their people through the process. Most of the employees were in rank groups where I was the only manager representing them. My boss made me prepare work sheets and take them through the process. The two of us sat in a room for 4 hours discussing each person, with her asking hard questions about the deliverables, and my rankings and ratings. And I had to hit a distribution.

The point is that I wasn't able to go off and just do whatever I wanted to with those people. Going through the process made me think about the people differently than I would have otherwise, and it made me identify the (relatively) slower performers. It was unpleasant, but I got to a good result. My philosophy about focal is that it needs to be improved, and the forced distributions need to be reconsidered. I think of it as similar to the system of government in the U.S: It seems broken, inefficient, tedious, and stupid some of the time. But overall it seems to work, and I'm not sure I could replace it with anything that would work better.

Wednesday, April 18, 2007

Earning some respect

AMD had announced (twice) that they were going to miss earnings for Q1. Intel products have been getting good press, and the super-geeky seem to be thrilled with the performance of Core2 Duo and Quad chips. Even Intel motherboards have gained favor with the over clocking crowd. But as recently as a month ago, Computerworld was less than flattering about Paul and Intel's 2007 product lineup.

Earnings for Q1 were good. Income was $1.61 billion, 27 cents a share. Last year was 23 cents/share. The tax settlement I mentioned earlier was a big factor and netted Intel and extra 5 cents. Analysts were expecting 22 cents, so we were right in line with the expectations. Our sales were just below expectations, $8.85B vs. an expected $8.9B. There good news here is that profit is up, since we hit the income expectation with lower than expected sales. Gross margin is 50.1%. One analyst said:

It doesn't appear that Intel is waging a price war. Rather, AMD has been cutting its processor prices in an attempt to maintain its market share gains to no avail.

That's great to hear from an analyst, but keep in mind that Intel has some good price cuts happening next week (this is public info). We'll have to see if these impact Q2 earnings. Intel foretasted Q2 sales between $8.2-8.8B. Wall street is expecting the higher number. Some analysts are concerned about rising inventory, and that Intel will be stuck with too much product. My uneducated guess is that the upcoming price cuts will take care of any inventory issues.

The other news is that Intel hit the employee target of 92K about 3 months ahead of schedule. I'm guessing this was due to a combination of aggressive layoffs and higher than average attrition.

My short take: it was a good quarter that demonstrates demand and affinity for Intel products is much better than it has been in recent years. Intel is doing well while AMD continues to cut prices and lose revenue and market share. Things may change when AMD gets more competitive products to the market.

Tuesday, April 17, 2007

In the news II redux

I need to correct something in my last post and didn't want to just slip it in there and pretend the mistake never happened. I mentioned that I was having trouble with the comments on the Silicon Forest Blog. The author of the blog sent me a not apologizing for the issue, saying it seems to be working fine, and asked how he could help. My immediate reaction was "Uh oh. I just flamed another blogger (and a real writer) for his blog comments not working without even checking to see if it was me." So I fired up IE, and it works fine. Clearly there's some issue with my Firefox configuration, but also an issue with me. I apologized in email, but want to do so here as well. Inexcusable for a tech guy from a tech company to be so careless (and lazy) when having a simple problem.

So thanks for the note, and sorry for casting aspersions on your blog. Mike is well known to readers of the Oregonian, but I highly recommend his blog as well. He's a good writer and obviously a very decent guy.

Monday, April 16, 2007

In the news II

Earnings come out tomorrow, and assuming I'm not still working on my taxes, I'll get a summary posted. Someone commented on the previous post about an article about focal in the Oregonian. (I've been trying to comment on the blog discussion about the post for the past two weeks but I can't get logged in, so I'll do it here.) Overall a good article. It's difficult to explain what focal is and how it works to people who haven't gone through it. I think it tends to sound a little more Draconian than it really is. But there is a mandate to identify the bottom of the pack (relative to the rest) and give them a strong message every year.

One correction I would make to the article is the statement that "the bottom ratings ensure that a certain number of employees are pushed out." That's not quite accurate. The goal is to ensure that the bottom employees get a strong performance message and know they have to step it up. If managers are doing their jobs (which is not always the case) an employee should know they have a performance problem before their focal review.

In preparation for earnings, a couple of more things to ponder. Tom's Hardware, a site that has not been historically Intel friendly, published an article about Intel gaining back market share from AMD.

...AMD has seen a dramatic drop in its U.S. market share for desktop retail sales.

We'll have to see how Intel positions this in the earnings announcement, but regardless this is good news for Intel. And it doesn't seem unexpected given the performance and popularity of Intel's new processors. Last week AMD also announced their second waring for earnings this quarter. I'm not happy that AMD is having problems, but I am happy that the market is embracing Intel's products. The competition between Intel and AMD is great for consumers.

Friday, April 13, 2007

In the news...

A few unrelated items that didn't fit into the other posts I'm working on but I thought worth mentioning . The Mini-Mirosoft blog had a good post recently on employees choosing to stay at Microsoft (or not). I'm not advocating that people should stay or leave Intel. From my perspective, more people are voluntarily leaving than is the norm, but I don't have any hard data. It also seems like the people leaving are in the 9-12 year tenure range. It could just be that I know more people who have been at Intel for longer periods of time than shorter. People past 14-15 years don't appear to be moving on at the same rate, nor do those with less than 7-8 years. Not drawing any conclusions, just making an observation.

A writer named Eric Sherman sent me a note to mention that he'd done an interview with Intel VP Don McDonald for an article in Advertising Age magazine. He posted the full interview on his blog. I debated on whether or not I wanted to give a magazine a plug here, but I figured the reading the short interview with Don was appropriate. (Thanks for the reference, Eric.)

Google and Intel appear to be working on a deal to get a bunch of new servers configured to their specs. I wasn't even aware that Google was running non-Intel servers. 300-400K servers is a nice number, but I've got to believe the bragging rights for winning back Google is a bigger deal than the actual sale. Nice job to whoever made this happen at Intel.

For the truly geeky: Intel is doing some platform announcements, including adding vPro into Centrino. I'm not sure what to make of them. There price on Viiv chipsets was dropped. If I'm reading this correctly, the cost to of the Viiv chipset for motherboard makers is $1. I'll post about Viiv and some other products in the near future, but it says a lot that neither me nor my ├╝ber-geek friends know what it does or how it adds value. (It either needs to bring content into the home, or manage it in a new, easy, seamless manner. Think TiVo or iPod.) There seems to be push to energize the platform market, which seems to be a little confusing.

Someone asked in a comment to my previous post what I thought about "the fact that your CEO threw Intel IT under the bus for losing emails?" I'm not sure I would characterize that way. The latest news seems to be that Intel now has until next week to find the missing docs. I don't have any inside info, but I find it hard to believe that Intel intentionally lost any email and fairly easy to believe that it was lost. (Disclaimer: this is my opinion only, and is not meant to represent Intel Corporation, the CEO, or any other employees.) I delete a ton of email as a matter of necessity. I'd be drowning in email if I didn't. Unless I was explicitly instructed to keep something, and the instructions were clear and obvious, I doubt I'd know exactly what to keep. Until you're getting 100+ emails per day that all require a response or some action, it's hard to imagine how hard it is to keep up. Trying to keep track of all the email is nearly impossible. Trying to know after the fact what I saved and why would be absolutely impossible.

Tuesday, April 03, 2007

Parallax Blog II

I'm working a few posts that need a little more time. For now, a few blog updates. I've made some minor changes to this blog, and will be making a few more. I removed the email subscription option since it was ugly and nobody seemed to be using it. I'm adding a subject grouping which should be done this week after I go back and attach subjects to each post. Look for some other minor changes over the next week or two.

I'm sorry to see that Pentrino VI at The Unofficial Intel Blog appears to have moved on. He preceded me with an external Intel blog and did a nice job. I'm sorry to see him gone. I don't have any other information, but wanted to thank him for his blog and wish him well.

I'm working on a Q1 earnings post to talk about the quarter, products, and other related matters. Some recent news that may impact earnings: Intel got back $275M from the IRS this quarter based on the results of an audit. Assuming the accrue this in Q1 that could give us a little boost. Intel also announced more details the upcoming Penryn and next year's Nehalem processors. There's some opinion out there that Intel's processor designs are copying those of AMD. (There are no comments that Intel is stealing anything, just that design ideas, such as integrated graphics, are coming from AMD first). I seriously doubt that Intel is following AMD's path, but we'll see where this news goes.