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

To: puborectalis who wrote (96366)	1/15/2000 2:20:00 AM
From: Process Boy	Respond to of 186894

stephen - <The controversy over Intel's (INTC : Nasdaq) earnings stems from two line items: amortization of goodwill and interest and other income. The guidance for amortization was $185 million while the company actually reported $241 million. The accusation is that the higher amortization is a way for Intel to play with their numbers. The company has made several acquisitions over the past year (for a detail of the acquisitions for 1999, see the company web page). While it is difficult to know exactly what the amortization schedule is on acquisitions, the higher than expected number does not benefit the company in this quarter. In fact, it decreases stated earnings. The additional $56 million in amortization decreases earnings per share (EPS) by $0.017. Therefore, if anything, we should add about $0.02 per share to the stated numbers. It is important to note that amortization of goodwill is not a cash item. In terms of cash earnings, the numbers do not matter. As for interest and other income, guidance was for $280 million. The company actually realized $508 million in interest and other income. Because of the increase in realized gains of its investments, known as Intel Capital, the company realized an additional $228 million, or $0.068 per share. After tax, that number amounts to about $0.05 per share. The net result of these two modifications to earnings results in EPS of $0.66, or $0.03 per share higher than expectations of $0.63 and $0.01 higher than the whisper numbers of $0.65. Either way, Intel had a great quarter. It is also important to note that gross margins were higher than guidance as well, at 61.3%. The higher gross margin number is a welcome for Intel, considering the pressures on gross margins over the past two years. In 4Q98, gross margins were 58.5%. > This doesn't sound evil or like a blatant accounting gimmick at all. PB