Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Thomas M. who wrote (97502)	1/25/2000 12:00:00 PM
From: Process Boy	Read Replies (1) \| Respond to of 186894

Tom - <Thus, Intel is hiding a substantial portion of its payroll expenses from the income statement. This roughly doubles Intel's earnings.> Only if you can show cost / expense. Based on your responses to Elmer, you haven't been able to show this. All I've seen is handwaiving. PB

To: Thomas M. who wrote (97502)	1/25/2000 12:08:00 PM
From: Michael Bakunin	Read Replies (2) \| Respond to of 186894

I'm not sure that's the proper way to expense options grants. SFAS 123 isn't perfect, but it's a place to start. According to the footnotes, fiscal '98 earnings would have dropped only a little, to $5.8 billion. See edgar.sec.gov The full effect of SFAS 123 won't be felt 'til fiscal '99, since options granted before '94 aren't considered. Moreover, while I think SFAS 123 is too lenient, I'd expense, at most, the fair value of all options granted. During fiscal '98, that was closer to $1 billion than $3.5. Buybacks are management's business, not an intrinsic part of options plans. -mb PS - sure feels odd to play devil's advocate on this subject -g-

To: Thomas M. who wrote (97502)	1/25/2000 12:50:00 PM
From: Saturn V	Read Replies (2) \| Respond to of 186894

Thomas <Intel spent roughly $3.5 billion on stock repurchases. Since the float stayed roughly the same, all this money was spent to fund employee stock options. Thus, Intel is hiding a substantial portion of its payroll expenses from the income statement. This roughly doubles Intel's earnings. > Arent we forgetting acquisitions. Intel has been acquiring companies, and some of these were accomplished by an exchange of the acquired company stock for Intel stock.Level One was bought by such a stock swap. So a part of the the Intel dilution and stock repurchase go towards acquisition. Secondly the stock repurchase is also used for employee stock purchase plans similar to the one used by GE and others. The company sells stock to employee's at a slight discount. Clearly both these items are not salary expense. The stock option is sold to the employee at the market price on the day the option is granted. Again the stock repurchase is not an expense. We have gone through several iterations of what a stock option is worth. Clearly there is an opportunity cost associated with it, since the company is holding the stock ( to back up the option) instead of selling it on the market , and using the proceeds. However it is not an expense. However I do not think that you are looking for reasoned arguments. You appear to be in a mud slinging mode. You are just looking for any mud to throw. Intel accounting is one of the most conservative you will find, despite what your august guru might preach. Intel is also one of the most profitable companies and also one of the most upright in its projections. The future is always open to question. You are entitled to your opinion, and I am entitled to mine. Either find good sensible reasons for your assertions or keep your mouth shut.

To: Thomas M. who wrote (97502)	1/26/2000 11:11:00 AM
From: Ali Chen	Read Replies (2) \| Respond to of 186894

Thomas, <Intel spent roughly $3.5 billion on stock repurchases.> Which year are you talking about? 1997? In 1999 the volume was $4.6B, which would translate into actual earnings of $1.24 instead of $2.11, or 70% overstatement. Two weeks ago I have compiled some data from Intel's year-end reports: Message 12567459 Upper part is official Intel data; the bottom half was adjusted for stock buybacks by myself. Some quotations from old reports: intel.com - for 1999 "For the year, the company repurchased a total of 71.3 million shares at a total cost of $4.6 billion. Since the program began in 1990, the company has repurchased 659.9 million shares at a total cost of $18.2 billion." intel.com - for 1998 "For the full year, the company repurchased 80.9 million shares at a cost of $6.7 billion. Since the program began in 1990, the company has repurchased 294.3 million shares at a total cost of $13.6 billion." intel.com - for 1997 "During 1997 the company repurchased 43.6 million shares at a cost of $3.4 billion under the program. Since the program began in 1990, the company has repurchased 213.4 million shares at a total cost of $6.9 billion. " intel.com - for 1996 ".. For the full year the company repurchased 16.8 million shares at a cost of $1.3 billion. Since the program began in 1990, the company has repurchased 84.9 million shares at a total cost of $3.5 billion."