Replies to post #61699 on Intel Corp (INTC)

[Professor MD]

Dear WBMW: Re: “Perhaps if you are a short term shareholder, you might prefer that Intel spend this money on you…”

I started investing in Intel the day I learned that IBM chose Intel’s microprocessors for the first PC. I continued adding to my portfolio of INTC and never sold any.

I agree with your evaluation of the employee and management of Intel. I could add that I believe that the ONLY significant value of Intel IS the “brain trust inside the company”. I trusted them with my savings and the future of my children and grandchildren.

I also believe that this magnificent team is worth every penny they earn. I also am aware that the six-year stagnation in the value of Intel’s share is a threat to their future. The only way they may benefit from the half a billion shares they earned depends on an early increase in their value, before the options expire. We, the long-term investor, are their partners.

My claim is based on the observation that enormous buy-back of shares does not increase the price of INTC shares. Enormous dilutions of AMD shares were often followed by exuberant increases in share evaluation. Wall Street is increasingly sensitive to yield (dividend), mostly because of the lowering of the income tax on dividend to 15%. I believe that we need a change in strategy.

[Elmer Phud]

some of us longer term shareholders see the benefit of retaining the brain trust inside the company.

In my opinion you both have valid cases. Yes, it is essential for Intel to retain their talent and options/grants are a means toward that end. Shares need to be bought back to prevent dilution. Otherwise the same money would be going out in salaries. It's gonna cost Intel either way.

As for dividends, I too would like to see an increase in dividends and to Intel's credit they are doing just that. The yield is now respectable and more importantly the rate of increase is itself increasing. To long term holders of INTC that can offer greater appeal than share buybacks, beyond that necessary to prevent dilution, because additional buy backs only benefit those who sell, not loyal shareholders who hold for the long haul.