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Technology Stocks : Intel Corporation (INTC)
INTC 36.20+0.1%Dec 26 9:30 AM EST
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To: Robert O who wrote (139604)7/18/2001 5:50:26 PM
From: pgerassi  Read Replies (2) of 186894
 
Dear Robert O:

The numbers Intel publishes for EPS mean even less because they include acquisition revenue but not the expense of purchasing them. That is why pro forma numbers are always so much higher. At some time they should be smaller. It just shows the higher bias inherent in them. Unallocated expenses are given 100% to "Other" expense. Shifting is easy, just make more expense categories not allocated and instantly IAG profits go up and Other profits go down (or as has happened for the last few quarters, losses rise). Capital expenses merely shift Cash assets (or higher liabilities (loans)) into Plant and Equipment assets. Depreciation is delayed until production start and then goes as an expense decreasing both equity and assets. If it ever reaches zero, the company is bankrupt. So it is not "irrelevant". The problem is Intel has all of these assets that are valued far above what they are worth including the amount they overpaid for their acquisitions. Semiconductor plants are valued at below book value these days of over capacity. That is because they depreciate faster than the government allows. Intel has unrealized losses in the stock, their fabs are worth less than they paid, their acquisitions are worth less and it all reduces stockholders equity.

All you are doing is trying to talk away a big negative for Intel. The change in stockholders equity is an important number and always will be.

Pete
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