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Comments (18)

I’ve been shifting capital into intc in anticipation of a recovery over the next 2-5 years
User 47429802 profile picture
@Sensor Unlimited

"Second, it doesn't really matter how the business uses the earnings (paid out as a dividend, retained in the bank account, or used to repurchase stocks). As long as used sensibly (as INTC has done in the past), it will be reflected as a return to the business owner."

Intel has a long history of wasting shareholder cash in acquisitions, though nothing atrocious lately. Only $5+ billion spent on acquisitions in 2018, 2019, 2020, and 2021. Intel spent the sum of $30 billion in 2016 through 2017 on acquisitions.

And, writing of paying too much...

"Lastly, Intel has announced to spin off Mobileye in 2022. The spinoff will be sizable (estimated to be more than $50B). The capital raised from this spinoff hence could fund a large portion (or even all of it depending on how much stake INTC decides to maintain) of its fab growth plans."

In March 2017, Intel paid $15.3 billion for Mobileye, which had 2016 revenue of $358 million. Intel paid 42 times revenue, which was extremely expensive. For 2021, Mobileye will have about $1.4 billion of revenue. We'll know the exact number by the end of the month.

A $50 billion spinoff of $1.4 billion of revenue is 36 times revenue, if the market is willing to give that type of multiple, when the deal occurs. Personally, I doubt it.

Had Intel simply put the $15 billion in VOO, it would be $35 billion. Even better, they could have invested in their fabs. Or, if regulators approved, they could have bought AMD for $15 billion. Hindsight and all that.
danielaqwe profile picture
@Sensor Unlimited
Thank you so much for an article which is totally void of the "nanometer word salad" we Intel investors have to endure on a daily basis.
Your approach to calculate the value of a company of this kind is meaningful and easy to understand.
Combined with some technical understanding of the products as well as good common sense about future macro trends... I got everything to make an informed investment decision.
Look forward to INTC regaining it's former glory.
Winnertakesall profile picture
Intel is going after the GPU market now which is going to cause for AMD/NVIDA to correct. I expect AMD to fall into the low 40s, and NVIDA to fall back to the low $50 range. Intel will be a $150 stock within 2 years.
AnonymousAlpha profile picture
@Winnertakesall Its time for Intel to rule once again.
So what are the great specs of Xe versus the competition?
Intel announced over 50 designs using their mobile ARC discrete GPUs, so apparently they've already convinced them.

Intel also specified ARC GPUs in their new EVO certification program. I presume that means Intel will certify performance of the coordinated features of their Deep Link technology.
Rex Rode profile picture
In the semiconductor space, never mistake profits for revenue growth. Without real revenue growth the stock will continue to trade sideways. Why is this so hard for some to understand. Leave your personal biases behind and just accept reality.
@Rex Rode good comment, and very true. Which is why Intel has been trading sideways and trades for such a low PE.
@Rex Rode So you think, all this investment into Fabs will not lead to more revenue?
@Rex Rode discrete GPUs, 5G infrastucture, expanded use of TSM foundry, new Oregon fab opening in 1H 2022 ... all directly contribute to tam expansion. Expanded use of Optane and silicon photonics also represent potential revenue expansion. Mobileye grew 40% in 2021.
Right on. All the negative comments about INTC on the various Alpha articles almost guarantee the upside. Stick with the charts. Looking good
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