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Amazon.com Inc. Message Board

  • pjlouie13 pjlouie13 Nov 15, 2012 11:35 PM Flag

    Re: Re: Re: Re: Re: Techstrategy is having fun...

    Come on Geegee! You got to be kidding!? At $12 INTC will have a dividend yield greater than an Italian of Spanish bond. Which one of those do you feel more comfortable holding? You tease Tech but I bet you have more INTC shares in you account than most of us do! - PJ

    Sentiment: Strong Sell

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    • Are you sad?

    • PJ:

      Thought experiment. What would the return look like it INTC raised $50B in 30 year debt at say 5% (it was 4.8% in the last raise and would likely be lower now). If it could buyback at these prices (which it couldn't... you'll see as we do some napkin math), it would reduce the share count by about 50%. The interest cost would be $2.5B a year. Hit to earnings per share would be about 15%, net of tax effect before reducing share count by factor of 2. Thus, levering up (not saying it should go this far, but just for illustration) to a level that is EASILY serviceable for a company with $23B in EBITDA, it could boost EPS by 70%. It's trading at a multiple of less than 9 now with a 4.5% dividend yield. It would be closer to a multiple of 5.3 and a 7.5% dividend yield there....

      I'm hoping INTC was buying back lots of shares by selling puts over the past 6 months, particularly the past 3. It would be a very good use of capital. And, then INTC can issue new debt to replace any cash consumed in the transactions... It is a less levered and more conservative approach to accomplish a similar objective to what I described above.

      Did I mention TI wants out of OMAP because it cannot make money? How many other chip makers will suffer a similar fate. "Startup" Global Foundries is losing money (but has Middle East oil money behind it so maybe it can be a permanent loss leader...). Samsung just passed 20% price increases onto Apple for its processor. Intel is a generation ahead in production and while it is significantly more complicated than just being an area game (wafer size, ramp to production yield, etc), 14 nm feature size will fit 2X number of devices as 20nm which is 2x as 28nm.... It puts INTC in a dominant position. That "margin hit" it got beat up for was actually INTC playing to dominate the future by shuttering old capacity and upgrading to 14nm when no one else can...

      Be patient and stay with the 2015s.

    • Tech,

      I learned my lesson with CMG. Got too cute and missed out on a ton. I'm all in with Apr 245 puts. With enough cash to double down if it blows up to 240. Do you recommend going out to Jan 14? At some point I'm going to move closer to the money because I'm just tying money up. There's minimal premiums on the those 245. I want some cash available if INTC goes down to 19. - PJ

      Sentiment: Strong Sell

 
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