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

To: GVTucker who wrote (146224)	10/30/2001 11:22:31 AM
From: Dan3	Read Replies (1) \| Respond to of 186894

Re: most PP&E is subject to pretty specific rules regarding depreciation You are confusing the calculation of taxes due with accounting requirements. A company can write down the value of an asset at any time, and take charges against its reported earnings at that time. It can't always deduct those charges from its taxable income. PP&E has NOTHING to do with the huge writedowns that NT has been taking No, but the goodwill Intel decided to add to to its balance sheet is exactly the kind of action that brought NT to the brink while NT was reporting everything OK. Intel has multiple problems in its asset statement, not just questionable accounting for the value of its PP&E. In other words, even if you are comfortable with Intel's PP&E accounting, you still have to worry about the goodwill they used to defer their acquisition costs. Nexgen's book value was about $25mm. AMD purchased NexGen for about $600mm, or 24x stated book value. NONE of that book value was written off. And AMD took a $10 million charge against that $25 million book value in the quarter Nexgen was acquired. What AMD did not do, that Intel has been doing throughout the past 2 years, was to add $600 million in goodwill to its balance sheet to avoid letting the costs of the acquisition impact immediate quarterly earnings. There is a dramatic difference in the way AMD has accounted for its acquisition costs, and the way Intel has accounted for its acquisition costs. purchase accounting and accounting for PP&E are apples and oranges You just can't understand that Intel has multiple, independent, problems on its balance sheet and the way in which it has been reporting quarterly earnings. it is impossible for Intel to legally manipulate its PP&E to the sum of $5 billion. Re-read my post. It is difficult for a capital intensive company to NOT "manipulate" its PP&E. That's why I used the phrase "even with the best of intentions." While AMD has aggressively taken write downs on older equipment, and avoided the use of goodwill, Intel has stood by as the asset inflation that is inevitable in any high tech company took place. In the last two years, Intel has increased the expenses it has incurred, but not yet taken, by 50% (from about $20 Billion to about $30 Billion - Goodwill + undepreciated PP&E). Do you think revenues will be 50% higher than those of last year any time soon? If you don't, then take another look at which costs Intel has acknowledged quarterly, and which costs it has deferred from its earnings statements as it accounts for its earnings during the past two years. From Q2 1999 to Q3 2001, those deferred costs have risen from $11,675,000,000 to $23,740,000,000.