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

To: Jacques Newey who wrote (66992)	10/18/1998 11:38:00 PM
From: Harry Landsiedel	Respond to of 186894

Jacques Newey. Re: "I've often wondered... if Buffett "understood" technology, would he buy Intel?" I have often wondered the same thing. My guess is "No" for a several reasons. 1) Most people fail to realize that much of buffett's capital is tied up in relatively high risk reinsurance business. As he points out, all the surprises in that business are negative ones. Consequently he looks for balancing investments in businesses with LESS RISK, ala Gillette and Coke. 2) He looks for businesses where the products don't change. This fits KO but not really Gillette. 3) He would be put off by Intel's high level of capital investment, which he would deduct from earnings after adding back depreciation. These "owner earnings" are lower than for companies with much lower capital investment (like Fannie Mae for example) 4) OTOH, he would LOVE the "moat" around Intel, the high margins, and the superb management. He might buy Intel for #4 alone and live with the weaknesses in #1-#3. After all he bought an airline once. How risky is that investment? I do believe that Intel would fit the investment model of one of Buffett's heros--Phillip Fisher, who has been a long term owner of Motorola. HL