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The legacy of Andy Grove

Andy Grove built Intel into the world's largest chipmaker, generated big returns for stockholders, and became an industry statesman.

During his 11-year tenure as chief executive, Andy Grove built Intel (INTC) into the world's largest chipmaker, generated huge returns for stockholders, and became an international industry statesman.

The 61-year-old Hungarian immigrant and author also has been recognized for his vision, authority, and wisdom, winning Time magazine's "Man of the Year" award last year.

Under Grove, Intel has seen its annual revenues soar to $25.1 billion in 1997, 13 times the $1.9 billion reported in 1987, the year he became CEO. During the same period, Intel's annual profits have grown to $6.9 billion from $248 million. Most remarkably, Intel--unlike a number of other technology companies--managed to stay in the black every year in the last decade.

In an interview today with CNET's NEWS.COM, Grove said the greatest challenge of his tenure was shifting the focus and direction of the enormous company.

"The most significant thing was the transformation of the company from a broadly positioned, across-the-board semiconductor supplier that did OK to a highly focused, highly tuned producer of microprocessors, which did better than OK," Grove said.

The result, he said, was the development of an outstanding microprocessor that went into PCs now used by more than 300 million people. "I think that's pretty good," an understated Grove said.

With rising revenues and profits, Intel's stock has split four times during his reign as chief executive. What this means for investors in the company is that a $100 investment in Intel ten years ago would have been worth $2,078 in 1997.

If he could turn back the clock, Grove said, he would have involved Intel in applications development and worked with developers sooner and more emphatically. "Our growth is limited, to some extent, by application developers," he said.

Grove noted, however, that the company eventually did start focusing on working with application developers, and he pointed out that the company also has promoted development via investments and an evangelist program.

Grove's view of the future is a universe of 1 billion connected computers. He estimates that the world is 15 percent of the way there but that it would be a lot closer if Intel had begun its development initiatives earlier.

Grove led the company as it achieved several technology milestones. In 1985, before Grove's assumption of the CEO post, the chip giant launched its next generation 386 chip, a significant leap from its previous architecture, the 286 chip. The more sophisticated 386 helped computer cloners, such as Compaq, grab PC market share away from IBM, which was slow to embrace Intel's new technology.

Under Grove's leadership, Intel brought out the 486 and then the next generation Pentium chip, rolled out five years ago. See special coverage: 
Intel's changing of the guard The Pentium chip helped the company grab the overwhelming market share it holds today--its chips are used in more than 80 percent of all PCs, and it ships almost 100 million chips annually.

Just as important, Grove pushed the company into the chipset and motherboard businesses. A motherboard houses the main electronics in a computer, while a chipset is a group of chips that serve as companions to the main processor.

This gave Intel a powerful vehicle for driving the PC industry relentlessly forward to make ever faster PCs. In short, by offering ready-made PC circuit boards and chipsets for every new generation of chips, PC manufacturers like Dell Computer and Gateway 2000 could quickly crank out thousands of new systems with the latest and greatest Intel technology.

Grove's achievements have earned him global renown.

Last year, for example, he was named Industry Week's "Technology Leader of the Year" and CEO magazine's "CEO of the Year" before the crowning achievement of Time's "Man of the Year" honor--which marked the first time that a high-tech CEO had earned the distinction.

"His character traits are emblematic of this amazing century: a paranoia buried from his having been a refugee from the Nazis and then the Communists; an entrepreneurial optimism instilled as an immigrant to a land brimming with freedom and opportunity; and a sharpness tinged with arrogance that comes from being a brilliant mind on the front line of a revolution," the "Man of the Year" article said.

Grove also was elected a fellow of the Institute of Electrical and Electronics Engineers (IEEE), and a member of the National Academy of Engineering. Over the years, he was awarded an honorary Doctor of Science degree by the City College of New York, and an honorary Doctor of Engineering degree from Worcester Polytechnic Institute. He is a recipient of an Engineering Leadership Recognition Award from the IEEE, and an American Electronics Association Medal of Achievement.

Grove has written four books, including his most recent, titled Only the Paranoid Survive. Published in 1996, the book discusses his personal philosophies and Intel's strategies for staying on top in the business world.

"I attribute Intel's ability to sustain success to being constantly on the alert for threats, either technological or competitive in nature," he said during a Web chat to promote the book. "The word 'paranoia' is meant to suggest that attitude, an attitude that constantly looks over the horizon for threats to your success."

Grove also has written more than 40 technical papers and holds several patents on semiconductor devices and technology. Newsmaker: 
Intel's paranoid leader He taught a graduate course in semiconductor device physics for six years at the University of California at Berkeley and is now a lecturer at the Stanford University Graduate School of Business, teaching a course titled "Strategy and Action in the Information Processing Industry."

But Grove has not only been fighting competitors. He also is battling prostate cancer, a fact that he disclosed publicly two years ago.

"His stepping down [as CEO] has absolutely nothing to do with that. He is in great health," Intel spokesman Adam Grossberg said. Last February, it was reported that Grove is no longer getting treatment for his cancer because the disease appeared to be in remission.

As Intel's chairman, Grove will focus on finding ways to extend Intel's technologies to other companies and industries. Another legacy is undoubtedly in the works.

(Intel is an investor in CNET: The Computer Network.)

Editors Jeff Pelline and Brooke Crothers contributed to this report.