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Technology Stocks : Intel Corporation (INTC)
INTC 37.04-6.2%Nov 4 3:59 PM EST
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To: maui_dude who wrote (153329)12/30/2001 10:19:37 AM
From: Dan3  Read Replies (1) of 186894
 
Re: When the revenue drops, most of the income disappears. But the same logic works in reverse.

What you've failed to consider is that current capital costs are not included in Intel's earnings statements - as is proper, since they aren't "used up" in the reporting period. But they are "used up" over a period of several years.

Once those costs have been incurred, they impact earnings for years - and those costs have been incurred, and they haven't yet had the chance to impact earnings.

This is one of the strategies Intel used to report earnings this year, at the same time its balance sheet was indicating losses (another strategy was treating employee compensation that was in the form of stock options as though it were not a cost). Capex costs impact earnings, for the most part, as a 5 year moving average, that cannot fall significantly for years - even if they cancel 100% of their capex projects.
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