Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 36.35

+0.5%

1:00 PM EST

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To: Mary Cluney who wrote (38351)	10/30/1997 9:25:00 AM
From: Reginald Middleton	Read Replies (1) of 186894

<Valuations, I am convinced, are not completely empirical processes. Much of it is irrational and a lot of it is subjective. Why should MSFT be valued at 46X earnings, QCOM 59X earnings, QUAL 233x earnings and INTC at 21X earnings? > MSFT has a larger economic spread than INTC, meaning that they make more "economic profit" per dollar invested than INTC. On the other hand, INTC invests more money than MSFT, but not to the same level of efficiency. Contrary to popular beleif, there is an empirical formula to evaluating the differences in valuation. The higher the spread, the higher the valuation. I also must caution you that accounting earnings are not an ingredient in the aforementioned formula due to their ease of manipulation. For more info, see the valuation primer under the papers link at rcmfinancial.com . There is also an economic model of Intel available under the valuation link from the same menu. Feel free to ask questions if you have any. RCM rcmfinancial.com

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