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

To: GVTucker who wrote (104693)	6/21/2000 9:56:00 AM
From: Road Walker	Read Replies (2) \| Respond to of 186894

GV, Intel realized a gain on Micron in the most recent quarter, but that isn't really relevant to the stock price (except for the tax liability, to a small extent). Unrealized gains are equally important. So you are saying the realized gain "isn't really relevant" but the unrealized gains are "equally important"? I really have no idea. And for a stock like Intel that is driven primarily by institutional interest, I don't think it matters all that much, either. We were talking about the press and it's reporting on Intel. The institutions may have a greater influence on the stock price, thats not the issue. The non-professional investor gets his information (and makes his decisions) from the business press, he doesn't have time to struggle through SEC reports. The business press has become more like the regular press, they headline bad news and footnote good news. Thats OK for Dan Rather, but in investing good news is just as significant as bad news to the decision process of buying or selling a stock. I still maintain that the best way to value Intel Capital is to take a multiple of book value. The better that you think they are, the higher the multiple you can given them. One thing I am positive about is that reported earnings of Intel Capital is only relevant to the IRS, and should not be used when valuing Intel Capital. Thinking out loud here. I think that depends on if "earnings" are commingled with other Intel operating income. If so, I think you may be right, it makes Intel Capitol less than an independent operating division and more of a parking place for excess capitol. If the "earnings" are maintained within Intel Capitol to reinvest, I would feel more comfortable in valuing it as an independent VC division that should trade on a multiple of it's realized performance rather than it's assets. Actually, it would probably be valued much higher on the basis of it's unrealized gains rather than it's realized gains. I would imagine that if you looked at Intel Capital's portfolio for the second quarter, there probably wasn't much gain or loss. Let's revisit that in about three/four weeks, when we have the information. John

To: GVTucker who wrote (104693)	6/22/2000 4:03:00 AM
From: Amy J	Read Replies (2) \| Respond to of 186894

Hi GV, RE: "I still maintain that the best way to value Intel Capital is to take a multiple of book value. The better that you think they are, the higher the multiple you can given them." -------- I think in another life, you must have sold corporate insurance, which is where assets, inventory, and book value really come into play. <G> However, in the venture world, valuations are more dependent upon the intangibles, like intellectual property, list of customers, market size potential, team, barrier to entry, and expected ROI, rather than the tangibles like desks, pens, and paper. The later is what your corporate insurance agent wants to know, the former is what your investors really want to know. But, for sake of argument (I love to debate), let's assume book value should be used as the valuation metric. And let's look at an example where this might backfire: Would you want a startup to spend all of its money on fancy desks or cars -or- would you want a startup to invest the money in hiring engineers from say Berkeley, MIT, Stanford, or any of the other leading engineering schools? Buying extremely fancy desks or cars will give you a higher book value than investing the money in hiring. So, while the later (i.e. investing in hiring) is better, this yields a lower book value. And I know your argument is: "you can always assign a multiple of book value." But I don't think it makes sense to value a business on some multiple which measures how potentially wasteful an entrepreneur might be, which is essentially what book value is. Re: "One thing I am positive about is that reported earnings of Intel Capital is only relevant to the IRS, and should not be used when valuing Intel Capital." You manage a hedge fund - I suspect earnings are very important to your investors, not only to the IRS. If your earnings were consistent and reliable, why wouldn't that increase the valuation of your company by a factor which is related to the expected annuity of the estimated gains? Do you think K&P should have a valuation according to some multiple that's based upon how expensive their desks might be (as oppose to a valuation which is related to how reliable, predictable, and consistent their ROI might be to their investors?) Amy J