By Michal Lev-Ram

SAN JOSE – On the same day that Intel (INTC) slashed more than $1 billion from its sales forecast and more analysts cut sales estimates for Google (GOOG), Silicon Valley luminaries momentarily put the downturn aside and celebrated a happier cause — using technology to benefit the world.

Nearly 1,500 guests on Wednesday night attended the annual Tech Awards, which recognize innovations used to alleviate poverty around the world. ”Tonight is a reminder of all the things that are going right,” said Mike Splinter, CEO of Applied Materials (AMAT), a Tech Awards sponsor. The speech came just hours after the chip equipment maker announced earlier Wednesday that it will cut nearly 2,000 jobs.

The international awards program honored 25 organizations, five of which received a $50,000 cash prize, including Digital StudyHall, an India-based organization that was recognized for bringing instructional DVDs to underpriveledged classrooms.

Other award recipients included the Full Belly Project, a North Carolina-based non-profit that has developed a $50 nut sheller that can shell 125 pounds of peanuts per hour and requires no electricity, which helps subsistence farmers in countries like Mali and Haiti.

The Portable Light Project, another Tech Award recipient, manufactures flexible solar panels that can be woven into clothing or handbags. The wearable photovoltaics harvest sunlight to charge cell phones and other devices. According to the Massachusetts-based nonprofit organization, it is already distributing its portable solar panels in countries like Mexico and South Africa.

“People who are poor are often on the move,” said Sheila Kennedy, who heads up the project. “They don’t have a roof, so you can’t put solar panels up.”

The star of the evening was Muhammad Yunus, who received the Nobel Peace Prize in 2006 for his Grameen Bank, which gives out small loans to some of the world’s poorest people. The father of the so-called microcredit movement spoke about his creative approach to financing and efforts to bring cell phones and solar power to impoverished regions. According to Yunus, his Grameen Bank has doled out more than $700,000 in housing loans (that kind of money won’t get you much in the Silicon Valley, but in Bangladesh a tin-roofed house costs just $300 to build).

Yunus said that when he initially approached banks about lending to the poor, they refused and said poor people are not credit worthy.

“The poor turned out to be more credit worthy,” said Yunus, whose Grameen Bank is self-reliant (it no longer relies on donor funds) and claims to have a loan repayment rate of more than 95% “We never had a subprime housing crisis.”

By Yi-Wyn Yen

SAN FRANCISCO – Intel CEO Paul Otellini, who runs the world’s largest semiconductor business, gave a sobering view of the economy to the Web 2.0 Summit crowd Thursday.

If you think the recession is bad now, says the Intel (INTC) chief, a year from now will be worse.  “This is the deepest one I’ve seen in my lifetime. All the smart people that I talk to tell us the U.S. is in for a two-to-three quarter recession,” Otellini said. “Unemployment peaks lag GDP. We’ll see much larger unemployment a year from now.”

In its weekly report, the Labor Department said new claims for unemployment dropped slightly to a seasonally adjusted 481,000 for the week ending Nov. 1. But every day more job cuts are announced. In the past week alone, big tech companies like Cisco (CSCO), Electronic Arts (ERTS), Motorola (MOT), and Xerox (XRX) have announced layoffs or hiring freezes.

Otellini said he was grateful to take a break from the doom and gloom to attend the Web 2.0 conference. The Intel exec provided a 20-minute demo of forthcoming Intel products and answered questions from Web 2.0 host John Battelle.

“I like coming here,” Otellini said. “It’s a respite from watching the stock market crash every day.

Otellini stressed that tech companies need to stay focused on a post-recession strategy. “We have to not think about today’s market turbulence but what can happen as we get through this and what kind of products we can develop around the web as we break out of this cycle,” he said.

Intel is betting on high-powered mobile chips. An Intel employee showed a person taking a picture of a Chinese restaurant with a mobile gadget and then using the web to translate the Chinese characters into English. He also demonstrated how Web 2.0 applications can be used on the go. He scanned a Lego-like toy called K’nex and on the screen, a YouTube video popped up of a person constructing a K’nex model.

Those powerful mobile chips are coming in the next couple years. Next year Otellini says Intel will introduce a new smartphone processor that has the capacity of the original Centrino laptop chip. And by 2011, Intel will offer mobile power that runs as fast as desktop PCs. Otellini acknowledged that to unlock the value of these faster mobile devices requires “a first-class broadband infrastructure around the world.”

The Intel chief says he’s encouraged by growth in China. During a recent trip, Otellini said he met with government officials who told him that China’s GDP would grow 8% to 9% in 2009. “They’re putting in programs that will shift savings and encourage domestic consumption,” he said. “They”ll start buying a lot of tech stuff and putting cash back into the system.”

By Scott Moritz

Dell (DELL) is trying unpaid vacations (for starters). 

The No.2 PC maker, already grappling with a massive turnaround strategy, is taking a closer look at expenses and has informed employees of a company-wide cost cutting plan that includes voluntary five-day unpaid leaves for everyone.

According to an internal memo confirmed by a company representative, Dell has frozen its hiring and is considering a range of cost-reduction plans.

In addition to the unpaid furloughs, the company is offering buyouts and cutting some of its contract workers. Dell already completed a 10% staff reduction plan this year that was put in place in May.

Sales, particularly in the company’s PC business, started slumping in September, and Tuesday’s move shows they haven’t bounced back yet. Dell is scheduled to release its October earnings results November 20. Some observers are bracing for a shortfall warning before then, given the slumping demand and overall decline of the economy.

Dell has been particularly vulnerable to the slowdown, having started its shift to a retail sales strategy and away from its famed buyer-direct, made-to-order manufacturing scheme. The company had boosted its staff levels for the transition.

In 2005, Dell had 72,000 employees, and by the end of 2006, the company had about 90,000 workers. Dell had 88,000 employees at the end of last year. “These were mostly white-collar workers brought in to build the business,” says Cowen analyst Lou Miscioscia. “Things have gotten a lot more challenging,” says Miscioscia, who doesn’t see the other PC makers like Hewlett-Packard (HPC) or IBM (IBM) having as bad a problem right now.

The big problem for Dell says UBS analyst Maynard UM, is that “they are unfortunately retooling during the backdrop of a weak end market. “

By Scott Moritz

If Dell’s (DELL) view is right, the tech spending hiatus that started in July isn’t ending anytime soon.

Less than a week after Dell warned that a U.S. slowdown in information technology spending was spreading to Europe and Asia, the No.2 computer maker now says the slump is getting worse.

“We saw some weakness in July, and August is always slow,” Dell CFO Brian Gladden said at a Bank of America investor conference Tuesday. “By the second week in September, we started getting the sense that this isn’t coming back the way we expected it to,” Gladden said. Earlier Tuesday, the company issued a statement that it was “seeing further softening of demand in global end-user demand in the current quarter.”

Dell shares tumbled 10% to a new seven-year low after the company gave its latest grim assessment of the business climate. Outlining the areas of weakness, Gladden pointed out that in the U.S., spending by small and medium-sized businesses is down, and the financial sector, currently in a credit crisis swoon, was a bit challenging. “There’s not a lot of IT spending going on in the financial businesses,” Gladden said.

Overall big business spending, which accounts for about 80% of Dell’s revenue, was “mixed but weaker than we expected in the aggregate,” Gladden said.

Internationally, the U.K. remained a tough environment, Germany had been solid but turned weak in recent weeks and sales in China, which had been slow during the Olympics, had not snapped back as expected, said Gladden.

Tech investors have taken some confidence from the relative good health and solid spending in growing markets outside the U.S. And Wall Street’s deepening woes, while significant, had not had a dramatic effect on the larger IT market. At least not yet.

But as Dell tells it, cash-hoarding corporate customers aren’t exactly ignoring the drama of Lehman Brothers’ bankruptcy protection and AIG’s financing crisis.

Tuesday’s news on the consumer side, where Dell has made efforts to be a bigger player, wasn’t very encouraging either.

Best Buy (BBY), which has been selling Dell computers since last December, blamed its disappointing earnings Tuesday on higher costs and a dip in consumer spending as fuel and food prices rise. “We have some work to do in terms of managing our expenses amid a challenging macro economic environment,” Best Buy CEO Brad Anderson said in a press release.

Dell’s shift to a retail strategy isn’t well-timed. Since founder Michael Dell’s return to the top job in early 2007, Dell has attempted to shift from its online, made-to-order PC-maker approach to more of a retail PC supplier. As part of the effort, the company says it has already eliminated two factories, including one in Austin, Tex.

Dell is looking to cut more costs and has been shopping its manufacturing plants around as part of an attempt to move more of its manufacturing to partners. The company is about one year into a three-year cost-cutting plan and is expected to have reached its target of eliminating 8,900 employees by the end of this quarter.

Asked if the company was considering a quicker move to bring down expenses, Gladden said: “We are taking a fresh look at all those costs given the environment.”

The news comes a day after PC rival Hewlett Packard announced that it would cut 24,600 people, or 7%, of its combined EDS and HP workforce. Nearly half of those workers targeted are in the United States. HP plans to replace some of those workers with employees in other countries as part of its globalization plan.

By Scott Moritz

Tech investors were rattled after Nvidia (NVDA) set off a big alarm.

The graphic chip supplier to the PC industry on Wednesday slashed its second-quarter sales forecast to about $912 million, 17% below analysts’ estimates. It also said it would take a $150 million to $200 million charge to cover replacement costs of defective chips.

The warning sent Nvidia shares down 31% Thursday and added more pressure to the Nasdaq, which fell 2%, and is now down more than 9% in the past month.

But some analysts think investors overreacted by sending tech stocks down on Nvidia’s warning. The company’s problems appear to be specific to Nvidia.

“While the company attributed a portion of the miss to global end market weakness, our checks indicate component demand from other chip companies touching the PC end market is stable,” JPMorgan analyst Shawn Webster wrote in a report Wednesday.

No.2 rival AMD (AMD), which fell 1% Thursday, likely saw solid demand for graphics chips and probably took some of Nvidia’ business in the quarter, analysts says.

Webster downgraded the stock to neutral from buy after concluding that many of Nvidia’s problems are company-specific. He says Nvidia started the quarter with a pile of excess graphics chips. This surplus was compounded by increased competition as rivals took market share and capitalized on a shift among computer makers from separate graphics cards to integrated-graphics chips. Nvidia, which commands 80% of the graphics processor market, mostly sells separate graphics cards.

Nvidia spread the blame for the sharp sales decline on a number of factors, including a replacement of bad chips, a soft economy, product delays and price competition. “There’s a bit of ‘and-the-kitchen-sink’ to this,” says one Wall Street analyst.

“We knew that the July quarter was going to be choppy, but we didn’t expect this magnitude of bad news so early,” Cowen analyst Dan Berenbaum wrote in a note Thursday, referring to the four weeks of business yet to book in Nvidia’s second quarter ending July 31.

Berenbaum says the stock is trading like the company is at death’s door, but he argues that “the near-term difficulties do not mean that Nvidia is in secular decline.”

By Michal Lev-Ram

When Sprint Nextel CEO Dan Hesse joined the wireless company last December, he inherited a backlog of problems. Among them: The logistical nightmare of managing two different networks formed by Sprint’s merger with Nextel, a high rate of subscriber defections and a bad (okay, horrible) reputation for customer service.

At his first conference call with analysts in February after Sprint (S) announced disappointing fourth-quarter earnings, Hesse himself admitted that “the issues we face are more difficult than what I had expected to find.”

But that didn’t stop the former AT&T (T) executive from quickly implementing some much-needed changes. Within five months, Hesse has cut costs by closing 8 percent of Sprint’s retail stores and laying off nearly 7% of the staff. He also made senior management changes, launched a new unlimited voice and data plan, and just this week inked a joint WiMax venture with Clearwire (CLWR) and a slew of high-profile investors.

Now, as Sprint prepares to release its first-quarter earnings results Monday, investors are looking to Hesse to see what he’ll do next to turn the wireless carrier around.

“So far the read on him is cautiously optimistic,” says RBC Capital Markets analyst Jonathan Atkin. “He’s taken prudent steps to evaluate what the issues are, and made progress on his checklist – including the critical item of how to move forward with WiMax.”

Sprint’s investment in WiMax – a next-generation network that promises faster speeds well-suited for data services like web browsing and music downloads – has been a main point of contention among investors. Under former chief executive Gary Forsee, the company poured about $5 billion into the technology, only to find its cutting-edge service bogged down by delays and an inability to seal a WiMax partnership with broadband Internet provider Clearwire.

But last Wednesday the two companies announced they had finally come to an agreement and would combine their wireless broadband operations to create a $14.55 billion venture. Intel (INTC), Google (GOOG) and a handful of other companies have agreed to invest $3.2 billion in the new company.

In an interview with Fortune earlier this week, Hesse said the upcoming WiMax service will give Sprint a “differentiating advantage.”

“This allows us to be the only company to offer 4G [fourth-generation network] services,” said Hesse. “WiMax as a technology is available now and it works now.”

Of course, it’s still not clear exactly when the new service will be available to Sprint customers, though the Clearwire joint venture is expected to close by year-end. Sprint rivals AT&T and Verizon (VZ) have said they are committing to a competing fourth-generation network technology called Long Term Evolution, or LTE, which is expected to become available around 2010.

With its increasingly narrower time-to-market advantage, WiMax is still far from a guaranteed success. And in the meantime, Hesse has his hands full trying to put out other fires.

Come Monday, investors will be looking for news regarding Sprint’s core business, selling voice and data services on its CDMA network, which has been bleeding customers. Subscribers have also been defecting from the iDEN network the company inherited when it merged with push-to-talk service provider Nextel in 2005.

“We are still looking for evidence that Sprint is generating positive momentum around its postpaid marketing to return back to positive postpaid subscriber growth over time,” Citigroup analyst Michael Rollins wrote in a recent report.

In an effort to retain and attract customers, Hesse has already embarked on a new brand campaign that aims to position Sprint as the “superior network.” But Rollins says that the company hasn’t “gone far enough to differentiate its message on network quality perception or price.”

Hesse has also said that improving Sprint’s customer service is one of his top priorities.

“Not only are we not attracting enough new customers, but our existing customers are leaving us at too big a rate,” Hesse had told Fortune in an interview last February, after Sprint posted a fourth-quarter loss of $29.5 billion and a continued decline in subscriber numbers.

There’s no question Hesse has his work cut out for him. But if his first five months in at the company’s helm are an indication of what’s to come, you can count on seeing more changes at the number three mobile operator – for better or worse.

By Michal Lev-Ram

Intel’s Classmate PC was meant to be an affordable laptop for underprivileged kids in developing countries. Now the chip giant says it plans to bring the low-cost personal computers to the United States and Europe.

But the Classmate PC won’t be the first stripped-down laptop to be sold in the developed world. Others, including the 2-pound Eee PC by Taiwanese manufacturer Asus, have already hit saturated computer markets in countries like England. If the trend continues, analysts say it could force other manufacturers to cut prices to compete, especially in a weakening tight economy. Of course, the Classmate also would drive demand for Intel’s chips.

Intel says the cost of making the next-generation Classmate will be between $250 and $350 a pop. At this point it’s not clear how much they will retail for in the United States and Europe. But Intel says the price point will stay within the “netbooks” category — a growing segment of bare bones mini laptops that sell for under $500.

Intel (INTC) began selling its Classmate PC last year in Brazil, Mexico and other countries. The small rugged laptop has a waterproof keyboard, 7-inch screen and just 2GB of flash storage. But an Intel spokesperson said the model that will go on sale in the United States later this year will be a second-generation version that caters to the needs of students in more mature PC markets.

“It’s an initiative in the PC market that is in tune with the challenged economic climate,” says Matthew Wilkins, an analyst with research firm iSuppli. “Disposable income is being pushed, and a platform that is more affordable for the consumer is a good thing right now.”

Wilkins says it’s likely big manufacturers like Dell (DELL) and Hewlett-Packard (HPQ) will launch low-cost laptop models later this year.

By Michael V. Copeland

If you want a hint at where innovation in the gadget world is headed, talk to the chip guys. These nuggets of insanely complex silicon that companies like Intel, AMD (AMD), Atheros, Broadcom and Marvell (MRVL) are creating today will end up in the phones, laptops, televisions and mobile video/music/Internet devices of tomorrow.

We all know that Intel is dead-set on making WiMax — wireless access measured in square miles — a reality. When they start shipping WiMax PC cards in laptops is another matter (Intel (INTC) said it’ll be around the middle of the year), but when they do, your laptop might start acting and looking more like the tidy mobile device it should be. Think about a sub-subnotebook machine, always connected to a broadband signal — it might make video calls via VoIP, stream movies, take photos and send them wirelessly back home or to the office. I want one now, but it doesn’t happen without the chipset (and the network infrastructure to go along with it). That’s a ways in the future for most of us, especially in the United States. But the capability is coming soon, and a raft of new gadgets that take advantage of it will follow.

One of the most interesting chip trends I saw last week at the Consumer Electronics Show in Las Vegas was encapsulated in a little device called the Eye-Fi. Here’s a gadget that exists today, but has lots of implications for tomorrow. What the Eye-Fi does is automatically stream photos from your digital camera via your Wi-Fi network to your PC or an online photo service. What the Eye-Fi team has done essentially is wrap a service around a common flash memory card and a low-power Wi-Fi chip from Atheros (ATHR). It’s these lower power Wi-Fi chips that are extremely interesting, when you start thinking about other services they enable.

All the manufacturers in that realm of the chip business are working on prototypes that are as power efficient and powerful as possible. But think about all the things that can happen if you can put Wi-Fi into all sorts of mobile and fixed devices and connect them to either the Internet or a private network. Gadgets get smart and can receive, send and potentially respond to whatever information they are set up to handle.

It could be smarter light switches that turn off and on via an e-mail or text message, or LCD picture frames that stream your e-mail to your bedside and upload a recipe to the kitchen screen every day before dinner. Or maybe some slick mini-display that scrolls updates from your Facebook friends on one side, reads you the news on the other, and does any number of other things that you find important or entertaining.

Who knows? The possibilities are numerous, but it begins with these chips now starting to ship. It also calls into question the future of other wireless standards like Bluetooth and Zigbee. Zigbee, a low-power wireless technology, has never really taken off. Bluetooth has, but combining Bluetooth with Wi-Fi in devices is much more of a headache than engineers would like it to be. Low-power Wi-Fi plays nicely with its full-power brethren and has the potential to sweep both other wireless standards away.

In the Broadcom (BRCM) booth at CES I got a demonstration of a lower power chip now ready to ship that allowed for high-definition video, graphics and audio in such a small package that you can already see all the little video devices/phones it will spawn. One very cool potential application combined that low power HD video chip with a motion control chip that Broadcom builds for the Wii controller and another very popular music device/phone that begins with the letter “i.” Basically, you get a handheld Wii, which, I would bet you’ll be seeing sometime in the near future.

By Michael V. Copeland

LAS VEGAS — The quiet here in a booth sponsored by Dell is at odds with the pandemonium all around at the Las Vegas Convention Center. Four plywood lounge chairs designed by Charles and Ray Eames sit on a dark floor made of some obviously recycled material. In one chair , a guy with headphones covering most of his head quietly taps on a laptop. Squares of drought-resistant grass act as a border around displays highlighting how to live and work with less impact on the environment. A Plexiglas wall invites people to use a grease pencil and answer the question, “What Does Green Mean to You?”

Although it is often wrapped up in a good deal of marketing hype, it’s a question that is beginning to be asked by the exhibitors here at the annual Consumer Electronics Show. Much of the “greening” of the technology world is by necessity. Stringent manufacturing standards and recycling goals must be met. But for their own success, gadget makers are developing new technologies that consume less energy so they can provide longer run times or cooler operating environments.

The goal is better functioning products that happen also to be greener than the power-sucking alternatives. Chip makers like Intel (INTC), Broadcom (BRCM) and Marvell (MRVL) have been beating that drum for several years and are getting amazing results. At this year’s CES, Broadcom is showing off powerful yet very efficient chips that enable things like the playback of high-definition  video on a cell phone. Other companies like Sony (SNE) and Samsung are using organic light emitting diodes to offer super-thin, bright and incredibly efficient screens. Are these kinds of technologies overtly green? No, but they are headed in the right direction.

A new cluster of companies at CES this year featuring “sustainable technologies” are overtly environmental. Some of the companies in this group include, Freeplay Energy which makes solar-powered radios and Meraki Networks, which sells solar-powered WiFi gear and aims to build a free WiFi network in San Francisco. This CES green group is a start, but it is a ridiculously small bunch of fewer than 10 companies.

Still other companies outside of this group have come to CES with a green agenda. One that is making a splash at CES is a company called Green Plug. The Silicon Valley startup previewed its technology Monday — an electronics component chip that provides a layer of intelligence so that gadgets can talk to their power source and make more efficient use of energy, whether it’s from a battery or a wall plug. Applications range from consumer electronics to cars, aircraft and power tools. And GM (GM) on Tuesday will unveil its Cadillac Provoq concept car, which it says will be “free from petroleum fuel and emissions.” That can only mean all-electric or maybe a hydrogen fuel cell-powered vehicle.

Back at Dell’s little green oasis, which must be noted is separate from the massive main Dell (DELL) booth and is tucked into the “sustainable technologies” area, spokesman Adam Schaeffer looks around at the mostly empty booth and stresses, “This is all about promoting the start of a conversation.” Nigel Williams, one of the 140,000 CES warriors here in attendance, walks up to the Plexiglas wall and ponders the question, “What Does Green Mean to You?” Next to replies already written in green, yellow and pink grease pencil that say things like “Hope” and “Breathing clean air,” Williams writes a simple statement, “There needs to be more green products.”

He’s right.