Intel Capital is a behemoth when you stack it up against traditional venture firms. What’s scary is that it’s not that big a deal within Intel itself.
Intel Corp.’s market value hovers at $250 billion. That makes Intel Capital’s $1.73 billion book value look puny.
To further put things in perspective, Intel brought in over $26 billion in revenue last year. Most of that came from its core microprocessor practice. Communications hardware and wireless products, like flash memory, combined for 18% of the company’s top line.
The company spends several times more on property and equipment than it does on venture investments. Last year, for instance, it spent $7.31 billion on capital additions to property and $3.79 billion on R&D. It also spent $2 billion on advertising in 2000, according to its annual report, and it will likely come in close to that range in 2001.
With the slump in the chip industry, Intel’s net profit dropped to $1.3 billion last year from $10.53 billion a year earlier. It didn’t help that Intel Capital was in the red. the venture group lost more than $450 million on equity investments last year, in contrast to a profit of $3.8 billion in 2000. Despite last year’s loss, Intel Capital claims that over its life it has netted in excess of $4 billion.
Intel Corp.’s stock trades in the mid-30s, about half of its peak of $74.87 in August 2000, and it’s on par with its trading range in early 1999.