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Intel continues push into communications market

Continuing on its plan to expand beyond PC chips, Intel buys another communications specialist, the chip giant's thirteenth acquisition since the beginning of 1999.

Continuing on its plan to expand beyond PC chips, Intel today bought another communications specialist, the chip giant's thirteenth acquisition since the beginning of 1999.

Voice Technologies Group (VTG) of Buffalo, N.Y., will give Intel products and technology for making servers and other equipment for routing telephone call traffic inside office buildings. VTG will be incorporated into the company's Dialogic division, which concentrates on telephony systems.

Like many other PC companies, Intel aims to merge telephone networks into the PC infrastructure. In this vision of combined networks, accessing the Internet through devices will become far easier. E-commerce companies, for instance, will be able to more seamlessly link telephone traffic with voice activated programs for searching sites.

"You will be able to access a database through a cell phone," said John Miner, general manager of the Communications Product Group at Intel, recently.

At the same time, these companies hope to take market share away from telephone equipment providers.

Intel paid for the company with cash, although exact terms were not disclosed. Through the acquisition, Intel will pick up VTG's existing product line, its intellectual property and around 90 employees. In many high-tech acquisitions, the target of the takeover is often the engineering staff, according to Miner, because their own abilities are woven into the firm's intellectual property.

Intel's strategy to Intel divides to conquer?diversify its businesses has largely so far been fueled by acquisitions. Since January 1999, the company has bought 13 companies and made investments in several others. Most of the activity has been concentrated in the communications area.

Although the PC processor division dwarfs Intel's communications divisions, the latter is growing. Last year, the Communications Products Group, which makes switches and other equipment, produced approximately $1 billion in revenue while the Networking Communications Group, which makes chips, produced roughly $2 billion in revenue, according to industry estimates.

Meanwhile, the company's stock is bouncing around a record high today after a report from Dan Niles, an analyst at Robertson Stephens, saying that first-quarter demand is fairly strong. As reported earlier, Paul Otellini, general manager of the Intel Architecture Business Group, among other Intel executives said recently that demand was slightly stronger than expected for the first quarter and that the company was digging out of its Pentium III shortages.

In late trading, Intel was up about 5 percent to $114.22.