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

To: Amy J who wrote (73681)	2/15/1999 8:30:00 AM
From: Mary Cluney	Read Replies (1) \| Respond to of 186894

Amy,>>>Here's my model :<<< WOW!!! That's the way to tell'em. Furthermore, in my rose colored glass scenario: If you add AMD_MD_factor(1) and take out - KD_factor(2) you could get a CYA_S(3) and make an Intel Traders Dream (ITD)come true. ITD = AMD_MD_factor * KD_factor * CYA_S (1) MD=Melt Down (2) KD=Kurlack Diss (3) S=Situation Regards<gggg>, Mary

To: Amy J who wrote (73681)	2/15/1999 9:19:00 AM
From: Joseph Pareti	Read Replies (1) \| Respond to of 186894

I attempted a similar task sometime ago Message 6065587 what would happen if you feed in current data and maybe your correction factors ?

To: Amy J who wrote (73681)	2/15/1999 4:22:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 186894

No, just seeking any model. I appreciated yours, though I would have chosen much different fudge factors, and not always more bearish. I don't think your 'failure factor' is as high as 1 in 5, for instance. I ran INTC's numbers through a simple dividend discount model (see stern.nyu.edu, with the following optimistic assumptions: a) buybacks count as dividends b) 50% of earnings go to buybacks c) there is a ten-year period of high growth (20%) d) this is followed by moderate growth (10%) to infinity e) initial buybacks next year total $2.50/sh (EPS is $5) f) you require 25% returns for the 10 years g) and require 12.5% thereafter The result is a hypothetical value of $93. Note that this includes very optimistic assumption d), but demanding f). Please note that based on the received wisdom (see the lecture), earnings growth = (1 - payout ratio) * (ROE); in the case of Intel, this is closer to 15% assuming half of EPS goes to buybacks. I recognize that DDM models of this sort are overly sensitive to the inputs, not to mention the required return. Drop f) to 20.1%, and the current value jumps to $134. Further drop c) to 15%, though, and the current value collapses back to $91. IMHO, Intel will be lucky to see ten-year EPS growth of 15% -- but that judgement appears to be precisely where I differ from the thread. mb