|
Intel, Cisco execs invest big in tech
By Matt Krantz, USA TODAY
If you're looking to buy an Internet stock, you might want to listen carefully to two
people you've never heard of.
Cisco Systems' Mike Volpi and Intel's Leslie Vadasz have invested more than $28 billion in
small technology companies the past five years.
To put that in perspective: The largest Internet mutual fund, the Internet Fund, has
only $579 million to invest. And $28 billion is equal to the amount invested in all 112
mutual funds that specialize in science and technology.
Vadasz, 63, manages Intel's stakes in more than 300 technology companies worth $4.8
billion. It's the largest venture investment program in the USA, says Anthony Perkins,
chairman of Red Herring Communications, which follows the world of venture capital.
Vadasz also has spent $6 billion of Intel's money so far this year to buy technology
companies outright. It's the first year in Intel's history that it has spent more on
acquisitions than on building plants that make the company's well-known computer chips.
Likewise, Volpi, 31, is the mastermind behind Cisco Systems' Internet-company acquisition
rampage. He's invested almost $19 billion, buying more than 45 networking companies the
past five years. Those companies generated $9 billion in revenue last year, nearly
three-quarters of Cisco's total.
Just this week, Volpi led the company's $799 million purchase of Aironet Wireless, a
company that runs wireless communications networks. It also paid $128 million for V-Bits,
which makes gear that lets digital video services be broadcast over cable TV networks.
Not only are Vadasz and Volpi big investors, they're privy to where tech is going next.
Brushing shoulders in hallways with engineers designing cutting-edge products, they're at
the epicenter of technology.
Why are Cisco and Intel investing in all these companies?
Intel's investment program has a selfish aim: to spur technology that will make people
want to buy faster computers, which will have Intel chips inside. Making money on the
investments is a secondary concern, Vadasz says.
Straight-out acquisitions, on the other hand, are the fastest way for both Cisco and Intel
to add products to their lineups in a hurry.
Of course, Volpi and Vadasz get better access to companies than you can, including tours
and interviews with a company's executives.
But the process of buying an Internet company is the same whether you're buying 100 shares
of a company or the whole enchilada.
And it's just as risky. "The public has become a group of venture capitalists,"
Cisco CEO John Chambers says. "They must realize that 50% to 70% of their investments
will crash and burn."
|
