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Technology Stocks : Intel Corporation (INTC)
INTC 40.56+10.2%Nov 28 9:30 AM EST
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To: Reginald Middleton who wrote (47494)2/10/1998 6:14:00 AM
From: Jacques Newey  Read Replies (1) of 186894
 
Reginald: "All comments are welcome."

Went to your website and printed the two INTC valuation matrices.

Regarding the discounted cash flow evaluation:

The "Current Scenario, likely case" (3.5 growth rate and 9.08% COC) looks reasonable. You came up with a Equity value per diluted share of $107. It compares well with two other share valuation calculations that were quoted in the November, 1997 edition of Worth magazine (pp 135). Michael Murphy (editor of California Technology Stock Letter) said Intel shares were worth between $101-113/share. Howard Ward (Gabelli Growth Fund) quoted $104/share as being fair value. Ward and Murphy used entirely different (and less rigorous ?) methods than yours.

Discounted cash flow and the above evaluation methods tend to indicate that shares of INTC are still undervalued.

Regarding the discounted economic value evaluation:

I am unfamiliar with this method. Would you care to elaborate a bit.
Obviously, it differs significantly from the discounted cash flow approach in estimating the value of a share of INTC. It indicates that INTC shares are currently over valued.

Why are the results of your two methods so different?

Which do you believe?

As you may have already surmised, I am not a financial type.

Thanks for your insights.

Jacques Newey
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