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To: Goutam who wrote (21324)	12/1/2000 6:00:38 PM
From: brushwud	Respond to of 275872

In 1999, Intel definitely did not deduct goodwill for tax purposes based on the info provided in their 1999 - 10K form. That isn't clear to me. If you are inferring that from this sentence: "Excluding the impact of the non-deductible charges for IPR&D and the amortization of goodwill and other acquisition-related intangibles, the company's effective income tax rate was approximately 33% for both 1999 and 1998." there is another possible explanation. If you search their 10-K for "Life", they give the life of their goodwill as 2 - 6 years. But according to IRC Section 197 mentioned by the other poster, goodwill is deductible over 15 years. Thus, the tax deduction may be limited to about 6% per year, but Intel may be charging it against earnings at about 16% per year or more. This would be more conservative, and they should be commended for it. But it may have lead to the characterization in that PR that goodwill is "substantially all non-deductible", because less than half of their write-off was tax-deductible.

To: Goutam who wrote (21324)	12/3/2000 11:29:26 AM
From: niceguy767	Read Replies (1) \| Respond to of 275872

Goutama: Had a chance to review INTC's Q3 release and noted the following: 1. INTC repurchased 14.3 million INTC shares during Q2 at a cost of $1.0 billion ($70 per share)...Looks like a cool $500 million loss (now $35 per share)... 2. INTC projected a decline in gross margins by 1% from 64% to 63%...Probably translates into a $500 million net income reduction...A 1% GM decline might be an underestimate given the duouble whammy of what seems to be softening PC demand and hardening Athy competition... 3. INTC projected an increase of 7% in R& D or about $150 million... 4. INTC projected investment gains of $950 million in Q4...(Given the erosion in the INTC investment portfolio that has since taken place, they may be hard pressed to find $950 million). 5. INTC is projecting $9.0 billion in Q4 revenue up from $8.7 billion in Q3... Conclusion: 1. The projected Q4 revenue increase derives primarily from sale of investments, which I believe in Q3 was approximately $750 million... 2. Even in the unlikely event that $9 billion in Q4 revenues is achieved, given the negative incremental earnings effect of items 1 (not really sure if (1) impacts earnings) to (4) above, INTC is unlikely to realize the rather heady (in retrospect) Q3 eps of $0.41...Might even miss bigtime depending on the size of GM erosion in (2) above...