Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 36.08

-3.2%

3:59 PM EST

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To: Paul Hrabal who wrote (1141)	4/24/1996 12:58:00 AM
From: Joel R. Phillips	of 186894

Intel in my opinion is fully valued at a PE of 16, even with strong technology sector growth prospects. Two reasons. First, Intel doesn't have what I would consider high-quality earnings. They are going to have something like $6 billion in cash flow this year and $4 billion in capital spending. You as a shareholder will never see that $4 billion. And the capital spending situation is only going to get worse, not better, as features shrink. Reason two, I don't see a lot of potential for margin growth. That limits upside appreciation long-term. I believe the current P/E is also above historical norms (I am looking at some old data from value line that I could be misinterpreting.) And, you may think this is superstitious, but I am looking at Intel's market capitalization. It is now pushing $60 billion. At your hypothetical PE of 25, $110 a share, Intel is getting close to GE. Historically, companies that get as big as GE tend not to go much further. --joel

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