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

To: GVTucker who wrote (172046)	12/1/2002 4:50:03 PM
From: pgerassi	Read Replies (1) \| Respond to of 186894

Dear GVTucker: That is not how stock option buy backs are accounted for. The amount of stock shares is roughly constant between quarters for Intel. At the $1 billion per quarter, the amount should shrink by 50 million shares per quarter. The amount it changes goes up and down by an amount less than 10% of this. Thus these are the results of stock options taken causing shares outstanding to go above the limit. These buy backs must happen or stock options can not be given over the long term. Thus these should be truly counted as a quarterly expense and should be subtracted from profits for that quarter since the exercise is already counted as revenue being added to quarterly profits. Some companies have agreed to do this even though that the first treatment is allowed by GAAP. These are companies who want to show the true picture and should be praised. It is one of the desired changes by the SEC and the new oversight committee want to make to force the second more desired treatment for GAAP and stop completely all Pro Forma earnings reports. Many investors would be shocked if all publications had to report the GAAP numbers in the statistics for Intel and other Pro Forma abusers. Taking out the amount spent in stock option related buy backs, Intel has lost money in the last few quarters. I also would like some other changes in the Intel annual reports. Not enough depreciation of "Goodwill" assets and also too small depreciation of fixed assets are two of the problems. The Goodwill are not being reduced at all even though Intel used to do this (I think that given the losses by these acquisitions, the Goodwill should be reduced to zero). Given the amount of Capex, the depreciation sould have risen yet somehow has been reduced. Both of these make the book value higher than it should be. If this continues for another few years, Intel could actually have a negative true book value even though they show positive book value in their reports. Then you could have an Enron type collapse into bankruptcy. I hope that Intel management does not continue down this path. Future huge profits could bury this, if quickly brought to an end in the extremely good times. But if they do not come, the fixes will be extremely painful and the longer they wait, the much more they will be villified to boot. Pete