John, re:<You guys want to write a sinister plot into everything that Intel does>
Each earnings release contains the following phrase, "In addition, "all other" includes certain corporate-level operating expenses (primarily the amount by which profit-dependent bonus expenses differ from a targeted level recorded by the segments) not allocated to operating segments."
The part non-bolded in the parenteses seems to have something to do with Intel's profit-sharing program. Now if 75-80% of the corporation is the IAG group, why do they assign these "corporate expenses" to the small "other" group when 75-80% of the corporate expenses belong in IAG?
I have no clue, I merely pointed out in my first post that
1)You should not worry that the "other" groups are really losing money as much as they seem to be AND
2)The above accounting practice will make profit margins in the IAG group go UP and profit margins in the "other" group go DOWN.
The above two points are indisputable. My own guess as to why Intel does this is that they want to be able to smooth out variations in the profit margin of the IAG group because that is what the street wants to hear. The phrase in parentheses makes it appear that the amount of the transfered expenses has something to do with "profit targets" in each of the divisions. It seems to me that Intel can change the profit targets whenever they please, so that, effectively, they can shift an arbitrary amount of expenses each quarter from the IAG group into the "all other" category.
Since 50% of the "other" group is flash and networking products, and these are both highly profitable, the accounting transfer of some "corporate" expenses to "other" must be very substantial.
As I said, I am not picking a fight with you or Intel, I really started this to ease your mind that Intel is wasting money in the "other" division. If I were an Intel shareholder, I would want to know if "all other" is really unprofitable, or it just appears to be because of the transfer of some corporate expenses to it.
Petz |
