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

To: GVTucker who wrote (146424)	10/31/2001 4:52:04 PM
From: Robert O	Read Replies (1) \| Respond to of 186894

Warning magnum opus ahead.... GV good post and I hear what you are saying but the fact of the matter is the market can be somewhat illogical (pronounced emotional) since it is human being driven. Imagine if you would, GV human, that sophisticated computers made investment decisions looking to all available information (SEC financials, etc.). There would not be the same high level of fear ingrained in market participants of needing to see cash disbursed regularly. If we could model it correctly, I am sure we'd see that the extra margin of decreased 'riskiness' of an investment purportedly garnered via paid dividends, is not sufficient reward for lessened upside that could have come from reinvestment over the long haul. This would be especially true in high tech fields where spending ability today is the only way to even have a chance to compete for tomorrow’s payday. It's damn near the definition of why people invest in tech leaders. Look, the actual dividend payout is so nominal it represents very little in way of a message of 'strength' anyway. Investors who can read financial statements can easily determine if there would have been cash flow available in any particular qtr. to pay a dividend and what the current cash situation is. Given that dividends create an immediate taxation issue for taxable investors at ordinary tax rates I would much rather choose for myself when I want to redeem shares to raise cash (at better marginal capital rates). Plus it eliminates the dreaded drop in share value for the year but income tax hit due to receiving dividends. The indignity! If investors are investing in INTC for the cash flow from dividends I would suggest they are irrational. You make my point for me in your last paragraph... I would rather take on the slight add'l risk of foregoing a nominal dividend in exchange for more upside in the future stock price by positive NPV projects INTC was able to invest in. Isn't that the reason you buy the stock to begin with? The belief in mgmnt's ability to be successful with their investment on your behalf? So in a real sense the nominal dividend payout is a 'hedge.' One that is cosmetic only and meets the needs of the much more conservative human side of investing. 'Ambition should be made of sterner stuff!' Sure, [holding back any cash flow from investors] implies an ex-ante anticipation of a better relative payoff from appreciation of shares. I am investing 100% in INTC and allow them to allocate resources as they see fit within the firm to increase [my] shareholder value the best they can. Why do you and some others in the market insist on wanting this synthetic evil twin Intel to represent the ticker INTC: 99.99% good INTC, .01% moneychanger machine? If I want 4 quarters for my dollar inserted, I’ll go the adult bookstore and head for the ‘booths.’ Shoot, you can do that yourself take $999.99 and invest in a non-dividend paying INTC, put the other 1 cent into money market. RO P.s Bill Gross bond guru at giant bond player PIMCO has a theory that some tech companies will NEVER grow into their valuations since cash flow never comes out of these companies in any meaningful way given they are always reinvesting. He almost likens it to a ponzi scheme in that there is always an implied promise of ‘cash flow’ i.e., the redemption of higher priced shares. It’s an interesting concept. But what do you expect the largest bond fund manager in the world to say about low dividend paying equities with high upside potential, compared to medium-high dividend (coupon) paying bonds with limited or no upside potential?? <ggg>