Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 49.36

+1.3%

9:57 AM EST

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To: Jorj X Mckie who wrote (171678)	10/21/2002 1:56:22 PM
From: GVTucker	Read Replies (1) of 186894

Jorj, RE: Now that I own the whole company, I am relying on earnings alone to get a return on investment and not the ability to sell a piece of paper at a higher price. If you bought all of Intel, you still own an asset that under your (admittedly highly optimistic) scenario would be worth vastly more than the principal of the bond. And to ignore that point is to grossly misstate the tradeoff. That piece of paper that gives you ownership of all of Intel is just as relevant as the principal of the bond. In fact, if you use your optimistic numbers, I don't think that it would be unreasonable to expect the market value of Intel to 10x the terminal period earnings, or $233 billion. And even if you discount that value back to today at 10%, a very high rate, you still get a present value of $74 billion. It doesn't take too much cash flow added on top of that to get the total value of Intel today over $96 billion. The point of the exercise was to use the assumption of absurd growth to show that at the current market price, the stock is still overvalued. Intel might be overvalued here, that's still certainly subject to debate. But you haven't demonstrated that at all yet.

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