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

To: Tim McCormick who wrote (102597)	4/19/2000 11:32:00 AM
From: herb will	Respond to of 186894

Tim: Re; I'll butt in with an answer. Well I will butt in too. The psuedo investment company will be shipping next generation processors in the second half of this year. Maybe the Plll is close to the end of its old life. If you think that Itanium, Willamette, Foster and Timna will be duds, then you are right. Intel is a pseudo investment company. But I think that that they will not be duds but rather they will be home runs. We shall see in due time and once again some will be winners and some will be losers. Herb

To: Tim McCormick who wrote (102597)	4/19/2000 12:19:00 PM
From: Amy J	Read Replies (2) \| Respond to of 186894

RE: "This is a psuedo investment company now. Investment companies trade at lower multiples to earnings for good reasons" Tim, [Edit: How low do you think CMGI's market cap should be? ] CMGI's market cap is now $18.5B for making $225MM in earnings. Did you know Intel's Capital group was in the top 3 as far as VC funds go? What market cap would you assign Intel Capital? Check CMGI out, and let's compare: $66.25 (CMGI) $18.5B market cap $18.5B / 66.25 = 300MM O.S. EPS = E/S, E = 300MM * .74 = $225M (last year CMGI made on their investments as income, realized declared gains) So, an income of $225MM in investment income yields a market cap of $18.5B. That was CMGI, now let's look at INTC: If Intel made $2B (i.e. realized from their cash & securities) every year on Intel Capital (Intel has about $11B in cash & around $11B in securities), then a proportional market cap would be: $160B. And, assuming CMGI rates: ~$400B - $160B = $240B market cap for operations. $400B ---> $120/sh (for entire company) $240B ---> $72/sh (for operations) -------------------- $120 - $72 = $48/share Intel Capital 2001 $72 * 1.35 + $48 2001 $72 * 1.35 * 1.35 + $48 = $180 240/400 = 60% = market cap of operational side 60% * $57.76 (PE) = $35 PE from ops, which is a PEG of one, if operation grows at 35%. PEG = 2, if operation grows at 17.5%, or PEG = 3 if operation grows at 11.6%. GV would like a PEG of 1 (I think), which means operations would need to grow by 35%. I think INTC might have a PEG more like 1.5, so that would be ~23%. Amy J Please double check my #s. I've got to go!