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

To: Road Walker who wrote (140069)	7/25/2001 12:50:24 PM
From: Tushar Patel	Read Replies (1) \| Respond to of 186894

I'm not an accountant. The figures I'm quoting are from operating profit and loss, does that include goodwill? I am not one either! However, if you look at the Q2 earnings release, you will note that the Operating Expenses line includes the amortization and purchased in-process R&D items. $6,334 Net revenues $3,307 Cost of sales $919 Research and development $1,174 Marketing, general and administrative $594 Amortization of goodwill and other acquisition-related intangibles $123 Purchased in-process research and development $6,117 Operating costs and expenses $217 Operating income The 217 number is clearly arrived at AFTER taking into account amortization expenses. Furthermore, if you look a the supplemental information, you see that IAG earnings were 1466 and non-IAG loss was 1249. Thus you get net earnings of 217 (1466-1249) which matches the number reported in the Consolidated Summary Statement shown above. So I am assuming that that 1466 and 1249 are also arrived at AFTER taking into account amortization of goodwill. If there are some accountants out there, maybe they can clarify. This essentially means the companies are worth less than Intel paid, does it not? Basically, yes. The value of a company includes intangibles. This gets amortized. This is OK but the problem was that Intel (and everybody else) bought companies in the bubble era when valuation of these intangibles reached great heights. So, now Intel is saddled with the goodwill that must be amortized over many years. I believe that in the last analyst meeting Intel said that ~50% of R&D was "other", ~50% IAG, correct me if this is wrong. I don't recall hearing that. Must have missed it. Maybe somebody else can verify.