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Portland State University

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Portland State University. Dave Nickel. Intel Corporation ... MBA, Indiana University. BS Finance, Northern Illinois University. 4. Intel Financial Snapshot ... – PowerPoint PPT presentation

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Title: Portland State University


1
Portland State University
  • Dave Nickel
  • Intel Corporation
  • June 28, 2006

2
Agenda
  • Introductions
  • Intel Approach on Cost of Capital
  • Calculation
  • Applications
  • Considerations
  • QA

3
My Background
  • Intel Experience
  • Controller, Legal Government Affairs
  • Controller, Wireless Networking Group
  • Controller MA, Intel Capital
  • Various Manager and Analyst roles in Business
    Units and manufacturing
  • NEC Computer Systems, Director Business Ops
  • Motorola, Finance
  • Education
  • MBA, Indiana University
  • BS Finance, Northern Illinois University

4
Intel Financial Snapshot
PL 2005
Balance Sheet Q1 2006
  • Revenue 38.8B
  • GM 23.0B
  • 59
  • RD 5.2B
  • SGA 5.7B
  • Pretax 12.1B
  • 31
  • After tax 8.7B
  • Cash ST 7.9B
  • A/R 3.9
  • Inventory 3.6
  • PPE 17.6
  • Goodwill 3.9
  • All other 10.3
  • Total Assets 47.2B
  • Current Liab 9.8B
  • LT Debt 2.0
  • All other 1.0
  • SE 34.4
  • Liabilities SE 47.2B

5
Intel Financial Trends
6
Calculations
  • Intel WACC Cost of Equity
  • Component Considerations
  • Risk-Free Rate (Rf) Time Horizon
  • Beta (b ) Time Horizon of observations
  • MRP (Rm-Rf) Historical vs. Implied
  • Process to Re-assess

7
Applications
  • Cost of Capital is basis for many types of
    financial analysis
  • Hurdle rate for capital budgeting
  • Products
  • Capacity
  • Margin Optimization
  • MA and Divestiture Valuations
  • Asset testing
  • Company Performance ROIC

Lower Risk
Higher Risk
Cost of Capital
8
Recommendations Considerations
  • Cost of Capital and hurdle rates are integral
    components shaping fundamental business direction
  • Establish a consistent methodology
  • Be Clear on Usage Models
  • Repeatable Methodology
  • Solid framework to focus debate on business
    issues
  • Unintended consequences of rate changes
  • Multiple rates can create conflicts
  • Make vs. Buy
  • Business Segments
  • Understand environment potential biases
  • Market valuations, 3rd party methods
  • Know the sensitivity to the decision at hand
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