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No. of Recommendations: 8
Points to be made on Intel in regards to Q1 which the Rule Maker portfolio owns and tracks:

• 13% sales growth
• 63% gross margins
• 30.8% net margins
• 9x more cash than debt
• .93 on the Richter scale for the Foolish Flow Ratio

• Intel expects interest and 'other income' alone for Q2 to be $2.3 Billion. Revenues for Q1 were $7.99 Billion.

• AMD had $1.09 Billion in revenue during the previous quarter.

BeReal's points to be made on Intel:

1. its falling behind in tech (maybe or maybe not it will reled with willamette, but for now its behind)

2. it has made critical mistake of underestimating demand, and let its opponent drive right in.

3. its core business is expected to be the dominant business even at the end of 5 yrs. The diversification is great, but won't be able to provide the growth needed if the core business should falter.

4. The interest and investment income is great, but they are really one time gains, and will not be looked upon by wall street as part of the core earning. Even it will make the PE look real good. Hence setting up for possible future disappointment. The gain of 300-500% on micron stock in 18 months is phenomenal, and i doubted they can repeat that feat. They have made some great investments, but dont expect them to be able to repeat it.

5. intels growth is very small yty (without the investment income).

The landscape has clearly changed for intel. Intel is a mature gorilla. Its trying to transform into a different gorilla (by diversifying), it may or may not be successful, but, look for some stormy landscape starting q4 2000.


In digesting the points you have made, I see more validity in the points at the top of the page as having any influence on an investment decision. Those metrics measure the underlying health of Intel's business. If a trend begins that starts to change those fundamental metrics - it will show in the quarterly reviews over a period of time.

Rather than address your points here, you will find plenty of discussion on the Rule Maker and the Intel board that have both addressed your points on a quality level.

I highly recommend The Gorilla Game book as a nice read as well as the Rule Maker Seminar in July and August of this year to add to your investing tool arsenal.

BB

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