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            B R E A K F A S T   W I T H   T H E   F O O L
                      Monday, December 11, 2000

benjamin.rogers@enron.com
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IBM, INTEL ANNOUNCE CHIP ADVANCES
HOW SMALL AND FAST CAN THEY GO? VERY AND VERY.
Intel's transistors will be three atoms thick.

By Tom Jacobs

Chip giants IBM (NYSE: IBM) and Intel (Nasdaq: INTC) both
announced breakthrough chip technologies. IBM has started using
a new manufacturing technology, while Intel promises transistors
as small as three atoms thick, making chips almost seven times
faster than its recently released Pentium 4.

IBM's new manufacturing technique, named CMOS-9S, showcases
advances in copper wiring, silicon-on-insulator transistors, and
better insulation so that chip circuits can be as small as 0.13
microns -- 800 times thinner than a human hair. IBM is making a
variety of chips with this technique, and customers should
receive their first shipments in early 2001.

But Intel now plans the world's smallest and fastest CMOS
transistor. At 30 nanometers thick, the Santa Clara gorilla
could fit 400 million of them on a chip, which is just shy of 10
times the number on a Pentium 4. Intel says that it will be
possible to build chips by 2005 that run 10 billion operations a
second, compared to the Pentium 4's 1.5 billion a second. Dr.
Sunlin Chu, vice president and general manager of Intel's
Technology and Manufacturing Group, said that new processors
using the transistors not only would be smaller and faster, but
use less power. He said, "It's one thing to achieve a great
technological breakthrough. It's another to have one that is
practical and will change everyone's lives. With Intel's 30
nanometer transistor, we have both."
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While industry observers believe that this advance approaches
the limit on thickness, Jim Hardy, an analyst at Dataquest, says
that "This is proving there's no reason the normal growth of the
semiconductor industry can't continue on for probably another 10
years." If so, that's good news for Intel investors, who have
endured recent Intel revenue warnings and stock price
cliff-drops. Fools recently dueled over its future.
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Intel closed at $34.00 Friday, down from a 52-week high of
$75.81, while IBM finished at $97.00, off its year high of
$134.94.
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NEWS TO GO

U.K. drug maker Shire Pharmaceuticals Group PLC (Nasdaq: SHPGY)
will buy Canadian biotech pharmaceutical company BioChem Pharma
Inc. (Nasdaq: BCHE) for $4 billion in stock. Shire will pay $37
a BioChem share, a 40% premium over the company,s $26.50 Friday
close. Shire looks to expand beyond its key niche in
hyperactivity drugs, which comprise half of Shire's revenues but
face increasing competition. Shire will pick up BioChem's
successful Epivir AIDS treatment, marketed by Glaxo Wellcome
(NYSE: GLX), but also BioChem,s Zeffix Hepatitis B treatment,
which has been disappointing.

All eyes watch tomorrow's start of the U.S. wireless spectrum
auction, with pessimists observing the big telecom lemming march
over the cliff into Debt Sea. To improve its chances, AT&T
Wireless (NYSE: AWE) has partnered with three Native Alaskan
corporations so it can bid for "closed" frequencies set aside
solely for small companies. Created in 1971 to settle Alaska
natives' land claims, the corporations -- whose phenomenal
success was portrayed popularly on TV,s Northern Exposure --
operate with little oversight and invest in natural resources,
tourism, and other businesses in Alaska and throughout the lower
48 states. The companies, together with AT&T, paid $240 million
to participate in the auction, 13% of the $1.8 billion paid for
the chance to seek more licenses. Cingular Wireless and Verizon
(NYSE: VZ) also partnered with small companies for the same
reason. The FCC will auction 422 licenses in 195 markets, and
estimates of the auction's take range from $10 billion to $18
billion.

Morgan Stanley Capital International, a division of Morgan
Stanley Dean Witter (NYSE: MWD), said Sunday that it would
change the weighting it gives companies in its benchmark
indices. MSCI plans to weigh stocks in its indices according to
market cap based on free float -- shares actually available for
sale -- not total shares outstanding. This is expected to hurt
companies that have a high percentage of shares owned by
families, government, management, or other restricted company
holdings. With an estimated $200 billion in sales and purchases
expected when the indices change beginning November 30, 2001 and
ending May 31, 2002, analysts expect U.S. and U.K companies to
benefit, with Japanese, German, and French companies to suffer.
MSCI will exclude any company whose free float is less than 15%
of its total.
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Bloomberg reports that the Federal Government's Copyright
Office, part of the Library of Congress, will publish a final
executive branch administrative rule today requiring that U.S.
radio stations pay royalties to record companies when the
stations broadcast on the Internet. About 4,000 of 14,000 U.S.
radio stations rebroadcast, or Web cast, on the Internet.
Spokespersons for the National Association of Broadcasters
decried the decision, which they say will add "tens of millions
of dollars" to the already $300 million in fees paid to
composers and publishers. Websites also assert that a related
Copyright Office decision allows them to negotiate blanket
licenses without having to negotiate with each record company,
as can radio stations that have limited customer involvement but
not individualized programming. The record industry disputes the
distinction between consumer-influenced ("play my fave song")
versus individualized programming, and promises to fight.
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