Intel Forms Single Communications Group

Less than a week after saying it would take a $600 million fourth-quarter impairment charge related to its Wireless Communications and Computing Group, Intel said Wednesday that it's folding that business into its Intel Communications Group. Sean Maloney, already executive VP and general manager of Intel Communications Group, will be the head of the newly combined organization. Ron Smith, senior VP and general manager of the wireless group and a 26-year Intel veteran, will retire early next year.

"The big technology challenges are in the communications space," says Maloney, who's been with Intel since 1982. Maloney identifies broadband wireless as an important emerging technology in the communications space. The keys to success, he says, are delivering signal reach, quality, manageability, and security.

Intel makes the move to consolidate its communications businesses as the company comes to terms with the wireless group's shortcomings. Formed largely from Intel's $1.6 billion purchase of DSP Communications Inc. in 1999, some of the group's products have shipped late, which prevented Intel from getting the market traction it wanted, Andy Bryant, CFO and chief enterprise services officer, said during last week's fourth-quarter update. DSP Communications was a supplier of chipsets, reference design, software, and other technologies for wireless handsets.

One of Intel's few weak points during the third quarter was continued loss related to the wireless group. It posted an operating loss of $124 million on revenue of $450 million. For the third quarter a year ago, the loss was $30 million on revenue of $586 million.

Combining the company's communications businesses will be an advantage as the markets for computing and communications devices converge, Intel CEO Craig Barrett says. "We see wireless local area networking and wide area cellular technologies coming together," Barrett said in a statement. "Consolidation gives us better product planning and customer focus in these strategically critical areas going forward."

Beginning next year, Intel Communications Group will be in charge of the wireless group's products, including processors based on XScale technology, along with chipsets, reference designs, software, and other technologies built around the Intel Personal Internet Client Architecture. The wireless group also oversaw Intel's flash memory business and digital signal-processing activities. These will be added to the Communications Group's business of making network processors, wireless LAN chipsets, gigabit networking systems, and network cards.