INTEL, Wall Street and Media Mute on Shelf Registration
We reported that INTEL filed a shelf registration for selling common stocks, debts and warrants on March 30, 2006. Interestingly, Intel, Wall Street and the media are totally silent on this. We emailed Eric Ross @ Think Equity(sell, target $16), Hans Mosesmann @ you-know-where, Sumit Dhanda at B of A(long 38 million shares, buy), James Covello at Goldman Sachs (long 61 million shares,bullish), seeking "analyst" opinions on the level of dilution, total radio silence. We emailed David Whelan and Maya Roney at Forbes, who wrote many expert pieces on Intel, they seem have suddenly lost their strong interest in Intel also, no writings appeared on Steve Forbes the former presidential candidate's influential journal.
We thought Intel's PR people might be on vacation, but no, we heard a lot of other noise such as Intel's value PCes, so they are still there...but in need of cash?
The silence is deafening.
posted by Sharikou, Ph. D. @ 3/31/2006 11:02:00 AM
10 Comments:
Sale of common stock at a time like this? Very curious. Intel sitting on more than $12 billion in cash which you would normally think would be more than enough to
run its business. At a time like this, when the stock is whithin a hair of its 52 week low? Not very encouraging and perhaps ominous.
$12 billion cash? But Intel has 100,000 employees, it needs $12 billion salaries. Now if it can't make profit...
On possible scenario:
issue shares to reach the 10 billion authorized number, current valuation $114 billion, resulting in a stock price of $11.4, but it would rake in a lot of cash to fight for its survival.
"Big Fat Rats" scurrying off the sinking ship trying not to alert joe public.?
why dosent intel just issue bonds for money. another question might be why are they trying to get this much are they seeking to buy another company. if you ask me money can only do 3 things in the short term. pay personal/bills. buy another company or other company's and only other thing i can think of is a price war.
if intel really starts a price war, it would be a major blow to them, considering how much they invested in new chip designs. even though intel's chips sell a lot cheaper than AMD's, but who wants to buy an inferior chip when you can pay a little extra bucks for a superior product?
Yeah, think about it. How much price advantage would it take to persuade you to buy an inferior Intel CPU? I bet if it was just $10 - $30 difference you wouldn't even think about getting the AMD. Even $50 would be easy to ignore. If you purchased an Intel, you'd spend much more than that on electricity. Also, there's the discomfort that you might experience using a hot intel chip on a hot summer day. Also, if you get an Intel motherboard, you can just forget about SLI. Go with an nforce 4 mobo, and you might have problems with the board's VRM buring out or frequent crashes. ( http://www.tomshardware.com/2005/06/03/dual_core_stress_test/ )
You should also keep upgradeability in mind. If you buy an Intel chip now, you obviously will not be able to use one of their much-hyped next generation chips when they come out. It doesn't seem that Intel can really cut prices enough to persuade the educated buyer to buy an Intel chip right now, at least without sustaining huge losses. They can't take a loss on every chip and expect to remain in business. Also, they can't lower prices enough to maintain their current market position without taking a loss. It seems that the best that they can do is hold out until their new chips come out, and hope that they can live up to at least some of the hype. If not, it doesn't seem that there's anything that they can do.
First, I'd like to send my compliments to Sharikou! It's not a matter of being right or wrong. But the fact that every claim, oberservation, comment, etc. that comes out of your mouth seems to be intelligently backed up by numbers and figures. I couldn't say the same for most internet bloggers out there!!!
Two points:
1) I've read alot of the blogs and comments about Intel's production capabilities and it's current FAB line-up. It seams to me that because Intel's products are NOT currently all being produced using a 65nm process technology (or better), this may be a problem for Intel. Not a monetary problem, but more like a timming problem. It takes alot of time to get these FABS build, tested and producing at full pace.
2) I've read the 'Shelf Registration' from the SEC web site. For some reason, I get a weird gut-feeling that this thing seems to be about a 'take-over' or 'merger' financing. I'm not too sure why I have this feeling though???
So with the above two facts, I've been thinking...
What if Intel plans on acquiring it's FAB's rather than actually building them? This would save alot of time, no? And depending on which they acquire, they may be able to gain significant production enhancements.
For example, what about the company that Intel currently outsources to (I forget the name right now). Or even better, what if they bought out 'Chartered Semiconductor'? They have a market value of about $2.6 Billion right now. Given a 25% premium, that would roughly equate to $3.25 Billion. That's peanuts for Intel, especially that they would gain in several ways:
a) Immediate production of their CPU's at 65nm on 300mm wafers.
b) Enhanced production capabilities (strained SOI).
c) Cut a HUGE production capability right from under AMD's nose (ok, so they can get sued and have to pay up years later, so what)
Jeach! (www.jeach.com)
Jeach!, interesting thought. But, Intel's methodology is "copy-exact", down to the color of the wall and location of the windows. So others' fabs are uselsss to Intel. I just assume it's the simplest situation, Intel needs $8 billion to finish its new FABs and is short on cash.
One must remember that the tech industry is the new marble business. Especially software, but also hardware. The big tech titans make more money off of doing the laundry than they do hocking their warez.
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