FINA - 010

Intel: Managing Working Capital
Introduction

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In early 2004, Intel was the undisputed leader in the microprocessor industry with about 90% market share. Since 1968 when it was founded, Intel had launched many groundbreaking products. By 2004, it had 450 products and services ranging from the ubiquitous PC microprocessors like Pentium, the 64-bit high-end Itanium 2 to mobile computing chipsets such as Centrino. Intel ended 2002 with revenues of $ 26.7 billion. Many analysts believed Intel’s success was as much about technology as about management. They attributed the success of Intel to its unbroken leadership chain. As one great leader retired, another took over. While Intel was well known for innovation, it had also attempted to be a disciplined company that maximized operational efficiency. Intel realized that as competition intensified, working capital management would become increasingly important.

Exhibit: I
Intel, Corporate Snapshot

1968
78,000
$26.7 Bill over 450
65
INTC

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Year founded:
Number of employees:
Revenues (2002):
Products and services:
Fortune 500 ranking:
Stock symbol:
Worldwide offices and facilities:

294

Source: Intel, corporate website www.intel.com

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Corporate Background

A popular story which went around in Intel was that one weekend afternoon in the spring of 1968,
Gordon Moore (Moore) dropped by Robert Noyce's (Noyce) home. The two decided to launch a new company to pursue large-scale integrated (LSI) memory. That was the moment when Intel
(abbreviation of Integrated Electronics) was born though the company was officially launched in the month of July that year. Little did they know that their new venture would define contemporary electronics and change the way the world worked, lived and played.
Andrew Grove (Grove), a first generation immigrant from Hungary, soon joined Noyce and
Moore. Moore handled