| Intel.s Maloney Pushes Pet WiMax Project to Fight Sagging Sales |
By Ian King and Jason Kelly
Sept. 8 (Bloomberg) -- Intel Corp..s Sean Maloney is betting he can reverse a drop in sales at the world.s biggest chipmaker with a wireless Internet technology he spent four years and more than $1 billion promoting.
Maloney, Intel.s chief sales and marketing officer, got Sprint Nextel Corp., the third-largest U.S. mobile-phone service provider, to commit $3 billion last month to the standard, known as WiMax. Motorola Inc. and Samsung Electronics Co. agreed to supply equipment to Sprint for its WiMax-based network.
``This has basically fired the starting gun for the race,.. Maloney, 50, said in an interview. ``There.s not a single service provider in the world that hasn.t looked at it and paid attention...
Like wireless fidelity, or Wi-Fi, WiMax creates an area in which electronic devices can wirelessly connect to the Internet. While Wi-Fi hot spots usually cover a coffee shop or home, WiMax networks can encompass entire cities. The peak range is 30 miles, meaning one tower would be able to cover downtown San Francisco.
Maloney says WiMax may be more successful than the Wi-Fi standard used in Intel.s Centrino chips, which helped the Santa Clara, California-based company boost sales an average of 13 percent a year from 2003 to 2005.
Intel.s sales and profit dropped in the two most recent quarters, though. Chief Executive Officer Paul Otellini in April said revenue will fall this year for the first time since 2001 as Sunnyvale, California-based Advanced Micro Devices Inc. gains market share in computer microprocessors.
Worst in Dow
The outlook for sales has led to a 23 percent plunge in Intel.s stock this year, making it the worst performer in the 30- member Dow Jones Industrial Index. They fell 9 cents to $19.22 yesterday in Nasdaq Stock Market composite trading.
Otellini, 55, is looking to WiMax to revive Intel.s sales over time. He is trying to revive Intel.s main processor business and announced 10,500 job cuts this week to reduce costs by $3 billion annually starting in 2008.
``There.s no doubt they need some catalyst,.. said Daniel Morgan, who helps manage $5.45 billion at Synovus Investment Advisors in St. Petersburg, Florida. ``Laptops is the one area that.s had the greatest growth, but it.s already starting to wind down...
Otellini also is looking to Maloney for help. In July, he picked the London-born executive, who.s been with Intel for 24 years, to direct all of the company.s sales and marketing.
Maloney, who had headed Intel.s laptop and phone-chip business, has promoted WiMax as the logical successor to Wi-Fi. His efforts paid off when Nokia Oyj and Motorola, the world.s biggest handset manufacturers, endorsed WiMax and said they would build it into future products.
`Love Intel.
``I love Intel,.. Ed Zander, CEO of Schaumburg, Illinois- based Motorola, said in an interview. He stood on stage with Maloney and Sprint Nextel Chief Executive Officer Gary Forsee at a New York event last month to announce the Sprint deal. ``I just want to own the next big thing...
The similarities between Wi-Fi and WiMax technologies, as well as Intel.s deep involvement, will help sell WiMax to more carriers and, eventually, consumers, said Tero Ojanpera, Nokia.s chief technology officer.
``Intel has been very active with WiMax and with Wi-Fi,.. Ojanpera said in an interview. The Sprint decision ``will give WiMax a push...
With WiMax, Intel is taking on rivals including Qualcomm Inc. that are pushing competing standards for wireless Internet access. Qualcomm has dismissed WiMax as no immediate threat, noting Sprint already uses its technology, called EV-DO, in handsets. ``WiMax is still nascent and proving itself,.. Qualcomm Vice President Jeff Belk said in an interview.
Competing Technologies
Espoo, Finland-based Nokia is already working on gear that uses competing technologies such as HSDPA, or high-speed downlink packet access. Cingular Wireless LLC, the biggest U.S. mobile- phone company, uses HSDPA and hasn.t said whether it will build a network based on WiMax.
Intel is trying to win support from wireless companies for WiMax after announcing in June plans to sell its cell-phone chip business, ending what analysts said was a failed $5 billion effort to break into a faster-growing market. Nokia was among companies that declined to buy those products.
This week, Intel completed a $600 million investment in Clearwire Corp., run by cell-phone pioneer Craig McCaw, to assist the company in building WiMax networks in cities from Jacksonville, Florida, to Eugene, Oregon.
Those funds and other investments bring Intel.s total WiMax investment to about $1 billion, said Amy Martin, a company spokeswoman. Reston, Virginia-based Sprint.s agreement last month to spend $1 billion next year and $1.5 billion to $2 billion in 2008 adds to that.
That commitment made it easy for Maloney.s wife to release him from a family vacation in northern Vermont to attend Sprint.s August event in New York.
``She knows how a big a deal it was,.. Maloney said.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net ; Jason Kelly in Atlanta at jkelly14@bloomberg.net
Last Updated: September 8, 2006 00:04 EDT
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