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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (93624)	12/9/1999 4:13:00 AM
From: nihil	Read Replies (2) \| Respond to of 186894

INTC a growth company? Look at the stock price and P/E. Please look at the balance sheet, and notice that SHEquity is up. Also, what do suppose its "other investments" are valued (its high tech portfolio) at: market? or lower of cost or market?

To: Amy J who wrote (93624)	12/9/1999 8:01:00 AM
From: GVTucker	Respond to of 186894

Amy, RE: Hi GV Tucker, do you have any comments on the following post and its CF analysis? I'd say that this is a pretty valid analysis. Earnings over this same period haven't grown all that much, either. Note, however, that the rear view mirror wouldn't reflect the fact that operating cash flow growth from '98 to '99 will be greater than 25%, and will probably grow next year also. That's why the stock is trading at 30x this year's earnings. Of course, I'm not telling you anything that you don't already know.

To: Amy J who wrote (93624)	12/9/1999 12:24:00 PM
From: Saturn V	Read Replies (1) \| Respond to of 186894

Hi Amy Ref- "I think '97 & '98 were major investment years - in both dotcoms and Merced. According to the Red Herring, Intel's ROI was the third best in the entire VC industry. This is extremely impressive. " I agree with you that Intel's investments have been outstanding. However in the Chuzzlewit Analysis the Intel investments hurt the return on cash flow. Firstly he subtracts from Intel's earnings the Intel's investments , for the apparent good reason that these are not returns to the shareholder. However when these investments pay-off and Intel sells them, he subtracts them from earnings because these are one time entities. Obviously his analysis is flawed, because you cannot have it both ways, and you end up with the paradox that the return on the Chuzzlewit cash flow would have been better without these phenomenal investments! Despite the the above paradox, Intel "cash flow picture" will not look stellar in the time frame of the Chuzzlewit analysis. Intel has recently changed its business strategy recently, and launched an acquisition binge. These acquisitions will not bring earnings for a while and severely depress the cash flow. If these investments are good they will dramatically improve the cash flow in later years. If he performs the analysis on the time frame before the acquisitions began , I am sure that the Intel record will look stellar.

To: Amy J who wrote (93624)	12/10/1999 12:46:00 PM
From: Harry Landsiedel	Read Replies (1) \| Respond to of 186894

Amy J. Re: "do you have any comments on the following post and its CF analysis?" Rather than a 3 year period, I think it wiser to look at a 10 year period. Warren Buffett defines an outstanding business as one that adds more than a $1 in market value to every $1 of retained earnings over a long period of time. This measures management's ability to allocate capital effectively. From 1990 to 1999 (today's price), Intel's market value grew by $248 billion, while the sum of the retained earnings for the same period is about $36 billion. Thus Intel management produced almost $7.00 in market value for every $1.00 of retained earnings. Those are world class results, IMHO. To judge the "growth" in a company's earnings, I use "owner earnings" rather that free cash flow as a measure of earnings growth. This is net income, plus depreciation, minus capital expenditures. These are "owner earnings" because this number multiplied by your shares represents your "share" of the earnings of the company. By retaining the stock and not selling it you are delegating management to redeploy the retained earnings to benefit the company and you for the long-term. In the past few years Intel's depreciation has increased significantly as Intel has written off earlier heavy capital expenditures, while capital expenditures have actually declined. The result is a large increase in "owner earnings", when compared to conventional EPS. Here are the two since 1995. EPS: .99, 1.45, 1.94, 1.73, 2.28(E) OEPS: .30, 1.15, 1.28, 1.52, 2.35(E) Looking at the second row, it's hard to argue that Intel is not a very strong growth stock, even over the last three years. Not surprisingly, the market has recognized it. For every $1.00 invested in Intel in 1990, investors now have about $29.00. Hope you find this helpful. HL