Intel Capital: The Berkeley Network Investment
Berkeley Networks’ goal of creating an open architecture aligned with Intel’s strategic goal. Although each party did its homework to understand generally what it would give and get, the relationship seemed to carry some dissonance. Berkeley Networks desired a controlled relationship keeping Intel far from its strategic motives; Intel, on the other hand, wanted to be more involved with BN and develop a closer relationship. Intel wanted to integrate technology on the processor, and Berkeley Networks needed to retain its value and develop a relationship with Microsoft through its ties with Intel. Furthermore, Berkeley Networks provided Intel great introduction into new markets with new customers and the potential to develop a new market segment much quicker than Intel could develop on its own. At this point in the relationship between Berkeley Networks and Intel, Intel has not learned enough about Berkeley’s switch to call the investment successful. If the relationship continued, it is highly likely that Intelwould fulfill its goal of using Berkeley’s switch to promote its own products in networking equipment. Thus far, Intel has invested aggressively and been very successful with its investments. Furthermore, Intel has only invested a minimal amount in Berkeley Networks. I recommend Larson seriously consider blocking the potential There are a few other optionsI would recommend for Larson if Intel does not want to block the buyer. If the potential BN buyer would allow the relationship between BN and Intel to continue after the buyout, then Larson should simply continue with BN and reap the benefits. If Intel has a change of interest and simply wants financial rewards from Berkeley Networks, then it could buy shares of BN. Since Intel wants to further its relationship with BN, I think the best option is to pay to keep BN and maintain and grow Intel’sposition in the market.
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