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

To: Tony Viola who wrote (156515)	1/22/2002 1:16:46 PM
From: GVTucker	Read Replies (3) \| Respond to of 186894

Tony, RE: It was all over CNBC as an Intel weakness after earnings came out. I think that we can all agree that the quality and accuracy of CNBC's reporting is consistently low. If the market actually believed some of CNBC's misinformation for any extended period of time, I might start to watch the station in search of some opportunities. I've seen enough evidence, though, that this isn't the case. In times when CNBC is wrong, the market usually figures it out after a couple of minutes. Only one analyst that I've seen since came out and said Intel's capex going forward is probably about right, which it absolutely is. We've already discussed Charlie Galvin, the analyst that you're talking about who upgraded Intel, partially because of the capex "reduction". In Joe Osha's post-earnings note, he doesn't even mention the capex target. He does note that there are a couple of items that might give the bears some ammo, but they have nothing to do with the capex. Rather, he refers to the "downbeat Q1 targets and surprisingly conservative 51% gross margin targets" as reasons why some bears might have liked the earnings report. Osha notes that he thinks that Intel management is just being conservative there, BTW. Looking at Morgan Stanley's report, Mark Edelstone notes that his only concerns are "overall economic performance and its impact on PC demand" and "potential double ordering given P4 allocations". Regarding capex, Edelstons says, "Finally, Intel's capital spending budget of $5.5 billion is expected to decline 25% in 2002 (versus our estimate for a 20% decline), and this sharp decline suggests that Intel's depreciation expense (30% of COGS) will begin to decline as a percentage of sales during the next couple of years." This is noted in the positives. Ashok Kumar? "Capex budget of $5.5B for 2002 is down 23% and 18% from the spending levels in 2001 and 2000, respectively. The high depreciation load of 16% versus the historical average of 10% and the lower ROIC is expected to keep Intel's capex sales ratios down from 25% to 15% while improving returns to the mid teens. Intel's muted capex, which represents over 15% of front-end tool market, is expected to negatively impact the recovery in the equipment sector." That's the only negative thing there, and it has nothing to do with Intel, only the equipment companies. And the less than expected capex by Intel is indeed a negative for those companies. AG Edwards, Goldman Sachs, UBS, doesn't matter who, none of them speak negatively about Intel in regards to capex. I cannot find a single analyst post the earnings conference call that believes that the capex number is a negative. The one or two that did have this belief were rightly straightened out during the conference call. In every single Intel CC for quite a while now, the number one burning question has been "what's your capex?" Given that Intel is the number one customer for most any semi capital equipment company, this is a rather important number for a capital equipment analyst to know, possibly the important number to know.