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Technology Stocks : Intel Corporation (INTC)
INTC 35.53-1.1%Nov 14 9:30 AM EST
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To: Amy J who wrote (93624)12/9/1999 12:24:00 PM
From: Saturn V  Read Replies (1) of 186894
 
Hi Amy
Ref- "I think '97 & '98 were major investment years - in both dotcoms and Merced. According to the Red Herring, Intel's ROI was the third best in the entire VC industry. This is extremely impressive. "

I agree with you that Intel's investments have been outstanding.

However in the Chuzzlewit Analysis the Intel investments hurt the return on cash flow. Firstly he subtracts from Intel's earnings the Intel's investments , for the apparent good reason that these are not returns to the shareholder. However when these investments pay-off and Intel sells them, he subtracts them from earnings because these are one time entities. Obviously his analysis is flawed, because you cannot have it both ways, and you end up with the paradox that the return on the Chuzzlewit cash flow would have been better without these phenomenal investments!

Despite the the above paradox, Intel "cash flow picture" will not look stellar in the time frame of the Chuzzlewit analysis. Intel has recently changed its business strategy recently, and launched an acquisition binge. These acquisitions will not bring earnings for a while and severely depress the cash flow. If these investments are good they will dramatically improve the cash flow in later years.

If he performs the analysis on the time frame before the acquisitions began , I am sure that the Intel record will look stellar.
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