Is Intel Losing Its Head? [SA Exclusive]

Photo credit: Masaru Kamikura

Re/code reports that Intel (NASDAQ:INTC) has invested $10 billion in its mobile unit over the last 3 years. Now, the company is throwing in the towel on this endeavor. After last week’s announced layoff, this is another set of negative signs coming from the giant chipmaker.

The management team seems to be making Wall Street its top priority. A classic mistake.

Brian Krzanich argued the company needs flexibility to invest in hot segments like Cloud and the Internet of Things (IoT). Intel’s management seems to be suggesting that layoffs and R&D crash programs are the way to achieve flexibility. I couldn’t disagree more.

The problem with R&D crash programs

Three years ago, Intel launched an offensive to get a nice piece of the mobile chip market. The company showed willingness to put huge financial resources and technical staff behind this ambitious project.

However, fast forwarding 3 years to the present, Intel just killed several mobile-related programs.

Additionally, one of the first measures taken by the current management team was to cancel the TV project. Clearly, there’s a pattern here.

Philip Fisher, the growth investing legend, once said that research projects cancellation was a waste of money.

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