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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (7846)	11/25/2001 2:02:17 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 99280

Operating income last Q was $389 MM, net earnings were $106 MM (they did take some reduction of face values of "investments, some $277 MM?). INTC happen to have 6.71 not 2.61 B shares, so your operating income of $400 MM (assuming zero taxes?) still come to only $.06/share. That is less then the current forecast of about $.09 to $.10 for INTC. Mind you, a 1% increase in gross margins out of lets be generous, $7 B, is still no more than $70 MM improvement in profitability. To get to your figure of 50% to 100% better performance in bottom line than the current forecast without the top line growing much above $7 B, you need margin improvements in the 10%, do you think that is "realistic"? The numbers are there for anyone to view, INTC has a "load" of $2 B just in R&D and SG&A, and that is already down by $2.5 B from a year ago. Their depreciation charges this Q are probably going to be around the $1.7 B. If INTC was seeing their sales go much above the $7 B mark, we would all have known of it by now. Their growth margins were at just under 46%. Assuming you are right and they are going to be 48% (2% rather than your 1%), and their top line is going to be "huge" at $7 B (7% over the last quarter), that will result in pretax profits of $1.36 B, and assuming they take no "charges" as they did in the last quarter, and pay about $400 MM in taxes, that gets you a "best case" of $.13.5/share (the bottom of your $.135 to $.18/share). Of course, if they get sales to the more likely $6.6 B, then they will have only $.10 (assuming again, no additional charges this quarter). Assuming another $.01 in charges (they do not have "investments profits" as they reported in the three quarters prior to the last one), and you get the street estimates of $.09 on the nose. Frankly, I think everyone will be happy if INTC squeezes 47% gross margins. Maybe your estimate is indeed "crude" (surely is if you assume that INTC has only 2.61 B shares then the earnings per share could be a "blow off"(g).) I am not sure how you come to your estimate of 50% to 100% greater than "current estimate". I am sure that your statement scared the daylight out of Ork (g). Zeev