GV,
Intel realized a gain on Micron in the most recent quarter, but that isn't really relevant to the stock price (except for the tax liability, to a small extent). Unrealized gains are equally important.
So you are saying the realized gain "isn't really relevant" but the unrealized gains are "equally important"?
I really have no idea. And for a stock like Intel that is driven primarily by institutional interest, I don't think it matters all that much, either.
We were talking about the press and it's reporting on Intel. The institutions may have a greater influence on the stock price, thats not the issue. The non-professional investor gets his information (and makes his decisions) from the business press, he doesn't have time to struggle through SEC reports. The business press has become more like the regular press, they headline bad news and footnote good news. Thats OK for Dan Rather, but in investing good news is just as significant as bad news to the decision process of buying or selling a stock.
I still maintain that the best way to value Intel Capital is to take a multiple of book value. The better that you think they are, the higher the multiple you can given them. One thing I am positive about is that reported earnings of Intel Capital is only relevant to the IRS, and should not be used when valuing Intel Capital.
Thinking out loud here. I think that depends on if "earnings" are commingled with other Intel operating income. If so, I think you may be right, it makes Intel Capitol less than an independent operating division and more of a parking place for excess capitol. If the "earnings" are maintained within Intel Capitol to reinvest, I would feel more comfortable in valuing it as an independent VC division that should trade on a multiple of it's realized performance rather than it's assets. Actually, it would probably be valued much higher on the basis of it's unrealized gains rather than it's realized gains.
I would imagine that if you looked at Intel Capital's portfolio for the second quarter, there probably wasn't much gain or loss.
Let's revisit that in about three/four weeks, when we have the information.
John |
