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Intel's Andy Bryant Offers An Explanation

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No question the $1.25 billion settlement check Intel is writing rival Advanced Micro Devices is grabbing lots of headlines. But the story behind the story deserves a careful look-see.

I've just gotten off the phone with Andy Bryant, Intel's former Chief Financial Officer and now the company's Chief Administrative Officer, who offered to walk me through some of the background connected to this case, and the reasons why Intel is settling the case now. I asked some very pointed questions, and Bryant, in his characteristic way, gave me some very candid, pointed answers.

First, how much of a worry is it that Intel's settlement today sends the signal that the company's checkbook is open, and that others, including the New York State Attorney General's office will start lining up for their cut? Or worse, that the settlement guts Intel's chances for a successful appeal of that $1.45 billion fine levied by European regulators. Or that the Federal Trade Commission will take this as a tacit admission of guilt and therefore impose severe restrictions and sweeping changes on how Intel conducts itself in the marketplace. Surprisingly, Bryant tells me that Intel didn't approach any other entity ahead of signing the settlement with AMD, feeling the deal with AMD was too important to bring in outsiders who might derail it. Strict confidentiality reigned supreme, even though it could have been in Intel's legal and financial interest to get all these other entities on board. It didn't happen that way. Bryant says the company continues to cooperate with the EU, continues to cooperate with the FTC, but says the pending case in New York will probably end up last on Intel's priority list, because the company believes the case is politically motivated. Period. He tells me as far as today's AMD settlement is concerned, "We're hopeful it helps (with these other outstanding cases) but we know it may not." Bottomline for those paying attention: Intel's checkbook is NOT open.

I asked Bryant whether he was worried this case was an admission of guilt. He says the company and its board are well aware of perception, but says the settlement was motivated by economics and business, not necessarily the law. Fact is, he says, AMD was demanding a "whole lot more than $1 billion," and with the spectre of the damages tripling under Federal law, the risk was simply too great, not to mention the enormous amount of time all this has taken from Intel's staff. Further, while three of the nation's top anti-trust attorneys met with Intel's board just yesterday and concluded Intel would prevail in the case merely on the facts alone, they also expressed concern that a jury might not necessarily absorb all the nuances. Damaging emails entered into evidence might have suggested Intel's tactics in the marketplace were, well, shall we say, too aggressive, and may have threatened customers, and while one or two might be explained away as a tough competitor's tactics in securing customers, too many emails with the same theme may have "undo influence on a jury." Re: How much are you willing to settle for? Intel will hold an all-hands meeting this afternoon as it begins to re-train rank and file as well as executives on how to communicate professionally; what is legal, and what is not. Presumably, Intel will also remind employees of the longevity of emails sent on corporate computer networks.

Which led me to ask Bryant why the settlement happened now. What motivated Intel to do a deal now with this litigation ongoing for the last several years. He says he came into the mix as a negotiator during the summer time, after Intel general counsel Bruce Sewell left for a job at Apple. Sewell got this deal 80 percent done before his departure, and like a wide receiver marching his team up the field only to hand the football off to a running back for the final, short push into the end zone, Bryant stepped in and finished. As a business guy, not a legal guy, Bryant approached settlement talks from a different perspective. Not to say that Sewell didn't do his job. He did it exceptionally well, Bryant says, but when he came into it, Bryant had a different approach. Bryant won't say this, but his approach certainly made a difference, and negotiations took on a different flavor, culminating with today's announcement.

The deeper question facing Intel now is, with so many legal and government entities watching its every move, how does it change the way it does business? And how will those changes affect the way the company competes in the marketplace? And will those changes reverse Intel's historic success? Bryant tells me he's not worried too much about that. He wants his sales team to remain aggressive in the marketplace, and if someone like Michael Dell wants to switch to AMD's platforms, it's not as if Intel will sit idly by and say, "ok." We'll go after that business, same as we always have, he tells me. As well Intel should. But this company needs to be careful, tread lightly, at least for now. Bryant was candid, but you could also hear that he -- and this company -- are chastened. That, and a $1 billion dollars, could encourage AMD to become a stronger player in the marketplace. It'll never realistically challenge Intel's dominance, but it doesn't need to. Intel losing a few marketshare points to AMD could be the best thing for both companies.

Meantime, there are still some serious legal clouds hanging over Intel, but if you look closely, that may be the sun peeking through. (We have calls into AMD and are awaiting a call back.)

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