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Technology Stocks : Intel Corporation (INTC)

INTC 36.26

+0.5%

3:59 PM EST

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To: tejek who wrote (168361)	7/16/2002 6:18:44 PM
From: L. Adam Latham	Read Replies (1) of 186894

All: Hey, I didn't do too bad in this calculation from 6/6/02: Message 17567557 Operating income is Revenues x Gross Margin % - Expenses - Amortization = $6.35B x 0.49 - $2.1B - $.23B = $780M. Using a 28.4% tax rate gives net profit of $558M or ~$.08 per share. Here's my Q3 estimate from Intel's guidance today using the above formula and a 5% midpoint for revenue growth and a 50% gross margin percentage (I think there's a chance they'll lower GM guidance): $6.6B x 0.5 - $2.1B - $0.1B - $0.025B<--(investment loss) = $1.075B. Using 28.4% tax rate gives net income of $770M, or $0.11/share (using 6.8B diluted shares). More Q4 calculations below. To meet a annual GM percentage of 50% (I also think total year GM percentage could be revised lower), Q4 GM percentage would need to be 52%. Q4 acquisition related charges come out to $90M. Who knows about investment gains/losses - I'll assume $0. I expect expenses to be trimmed in Q4, so I'll use $2.0B vs. $2.1 for Q3. The tough part is what to use as a Q4 revenue estimate - I'm not sure but I'll use 5% over Q3, or $6.9B. So a Q4 earnings estimate would be $6.9B x .52 - $2.0B - $0.09B = $1.5B. After-tax net income is $1.07B, or $0.16/share (using the same 6.8B diluted shares). This would give 2002 EPS of $0.48. Could be higher if they do indeed meet their goal of 51% GM percentage for 2H. Note that I am including acquisition charges in all my calculations, as I think that's the best way to go in the current climate. Excluding acquisition charges I get a full-year EPS of $0.53, still below current concensus estimate of $0.59. Adam

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