The investment managers at Intel Capital can expect changes in their take home pay in the coming months, President Arvind Sodhani told VCJ.
Sodhani declined to go into details, but when he took over as president of Intel Capital in March 2005 he said he wanted to assess the group’s investment professionals based on their returns. Keeping tabs on who is doing well and who isn’t may make it easier for top performers to demand more compensation. “We are sensitive to that fact and we’re working on it,” Sodhani says.
The change in compensation comes as Intel Capital finishes a 15% to 20% staff reduction. Sodhani says the reduction is almost finished and he is not looking to take on any new investors at this time. “Overall, there was a need for Intel to go through a structural efficiency effort,” Sodhani says. “We’ve done our part.”
The layoffs are part of a larger restructuring at Santa Clara, Calif.-based Intel Corp., whose leading market share has been narrowed by rival chipmaker Advanced Micro Devices. In a response to Wall Street’s complaints about Intel’s lackluster stock price, CEO Paul Otellini announced in late April that he was launching a “wholesale” company review aimed at cutting $1 billion in costs. “We will restructure, resize and repurpose Intel for the future,” he said at the time.
Intel Capital had already streamlined its operations by eliminating the distinction between “strategic investors” and “treasury investment managers,” and retraining each group to conduct due diligence research and investment management. The changes made the group more closely resemble its venture capital counterparts and helped eliminate turf wars between investors in each group, Sodhani says.
Intel Capital isn’t having any trouble putting money to work, even with a reduced staff. The firm says it invested $249 million in 86 deals during the first half of the year. It has since announced several large funding deals, including a $600 million investment earlier this month in Clearwire, a Kirkland, Wash.-based WiMax infrastructure provider, and a $40 million investment in Chinese IT outsourcing firm Neusoft, its largest China investment to date. (For more on Intel Capital’s recent deals, see the VCJ Most Active table in this issue.)
This past month, Sodhani also announced two new initiatives designed to help startups. Intel Capital has launched a program for licensing key Intel patents to startups called the “IP Access Program.” It also will offer its startups the chance to meet with big Intel customers such as Comcast and Lenovo during something it calls “Intel Capital Technology Days.” —Alexander Haislip