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

To: John Hull who wrote (105766)	7/17/2000 8:31:53 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

John - Re: "Just remember that Intel's IDF event falls on Aug 22-24 and that it's in an accessible location (SJ) for the press and analyst crowd this year." Thanks for pointing that out - I had forgotten this since Intel usually holds this in October or November. I do hope that Intel creates a good "buzz" around that time. However, if Jonathan Joseph spots one extra capacitor in Taiwan - and tanks the market by his revelation - I'll be ready to go shopping ! Paul

To: John Hull who wrote (105766)	7/18/2000 10:14:04 PM
From: greenspirit	Respond to of 186894

John, congratulations to you and your entire team! An incredible performance! Well done! I hope you have a nice bonus coming. :) July 18, 2000 The Intel Investment Bank? By Monica Rivituso smartmoney.com WE ALL KNOW that Intel (INTC) is good at making chips. But investors saw Tuesday that the company isn't bad at making investments either. Intel reported second-quarter results that reflected $2.3 billion in interest and other income, primarily investment gains. That's up from the $725 million Intel told analysts to expect a couple of months back. Many believe the threefold gain came from selling a part of its stake in memory-chip maker Micron Technology (MU). While a number of companies are including investment gains in their earnings, Intel has become the prime example of just how big this phenomenon has become. Sure, Intel has included investment gains in recent quarters that have ranged anywhere from one to four cents. But this time, Intel's gains will pack an additional 31 cents a share onto earnings, according to First Call/Thomson Financial, bringing the consensus earnings estimate to 98 cents a share (compared with 51 cents a year earlier). That means nearly one-third of the company's earnings are from selling stocks, not chips. "It wasn't until the market got so frothy that these gains started to show up in big numbers," says Charles Hill, director of research at First Call. Including investment gains in corporate earnings has become one of the stickier subjects on Wall Street. In the weeks preceding Intel's report, there was a fair amount of deliberation among analysts whether to fold the company's substantial investment gains into estimates. Last week, Salomon Smith Barney's Jonathan Joseph described in his research how Intel has been asking analysts to view its investment gains as recurring revenue and income and include them in earnings estimates. Joseph eventually cranked up his estimate to 99 cents a share from 72 cents. Terry Ragsdale, a Wall Street Journal All-Star analyst at J.P. Morgan, was another holdout on the Street who eventually hiked his estimates, but not before joking in a report last week that he knew when to say "uncle." "Clearly, this should be a messy quarter from a reporting point of view, and investors will have to work a little bit harder to figure out what the quarter looked like operationally," Ragsdale said in his report. Then again, some on Wall Street are more comfortable including investment gains in earnings numbers. Dan Scovel, an analyst at Needham & Co., says Intel should be recognized for its investing aptitude. Peter Wolff at ING Barings agrees. "It's an ongoing business for this company," he says. In the past, investment gains were excluded from earnings, but with the massive stock market run in the past year, that's changed. Companies argue that profits from their strategic investments are a part of regular business and should be reflected in results. Typically, it's the large technology companies that post the most significant investment gains. Companies such as Cisco (CSCO), Microsoft (MSFT), Texas Instruments (TXN), Compaq Computer (CPQ), Dell Computer (DELL), Oracle (ORCL) and Lucent (LU) have also reported big returns, according to First Call. But big-time tech players aren't the only savvy investors. Banks like Chase Manhattan (CMB) are seeing "huge venture-capital gains," says Hill. But including these vast gains also raises some questions. For one, there's the future comparison that will be made against Intel's second-quarter results. Who's to say the chip maker will be able to consistently pull in at least $2.3 billion from its investments? If there's a protracted market downturn, for example, Intel's reported earnings could take a steep hit. "It's a problem," says First Call's Hill. "And I don't think anyone out there other than the technology analysts would say, 'Hey, I'm going to value Intel on a number that includes 31 cents worth of investment gains.'" Part of the problem here is that Wall Street hasn't treated the subject of investment income uniformly. Take Dell and Compaq. The Street excluded Dell's investment gains from January-quarter estimates but included them in April. Analysts treated Compaq entirely different, including December-quarter gains in earnings estimates but excluding them from March-quarter results. "I don't know how you explain it," Hill says of the varying approaches to investment gains. "But it does show the confusion that exists out there among the analysts. This is really kind of a fuzzy thing that they can't seem to make up their minds on." The fact that it's no longer a couple of pennies in Intel's case certainly raises the stakes. For investors, the question becomes whether the gains are a legitimate part of earnings or just a way to pump up the reported number.