2010年8月20日 星期五

FW: Intel is buying McAfee?


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寄件者: Karthik Krishnamoorthy (RD-CA-C)
傳送日期: Friday, August 20, 2010 3:58:19 PM
收件者: Fei Huang (RD-CN); Newsbank
主旨: RE: Intel is buying McAfee?
自動依照規則轉寄


from: http://money.cnn.com/2010/08/19/technology/intel_mcafee_deal/

 

                 Intel's $7.7 billion purchase of security company McAfee makes plenty of financial sense, but it's a head-scratcher from a technology standpoint.

 

...

 

But Intel CEO Paul Otellini offered up one buzz phrase that actually means something to the company right now: "Value for Intel shareholders."

Intel has $17.8 billion cash on hand, which is just sitting there, earning very little for the company's shareholders.

So what to do with that cash? Intel could increase its dividend, but there's only so much it wants to give away. It could invest in the businesses it already owns, but the company was recently downgraded by analysts because of slowing demand for personal computers -- a problem that cuts right to the core of Intel's business model.

Alternatively, Intel could buy a company that it thinks will generate income for its investors.

...

Many analysts expressed concern that Intel paid a 60% premium over McAfee's closing share price on Wednesday, which is expensive by most standards. But others noted that the return on Intel's investment will likely far exceed what it paid for the security company.

"Everyone's focusing on how expensive it was, but with this deal, Intel's cash flow is growing, its balance sheet stays clean, and the capital is at a very low cost," said Ken Hackel, president of CreditTrends.com and author of Security Valuation and Risk Analysis. "This gives Intel a positive spread over what it'd earn ordinarily by investing in the slowing PC market or holding onto its cash."

 

 

 

From: Fei Huang (RD-CN)
Sent: 20 August 2010 12:59
To: Newsbank
Subject: RE: Intel is buying McAfee?

 

 

It seems be true that the acquisition benefits Intel’s long term vision. But I’m still not quite clear on what Intel’s CEO Otellini said:

"Number two, it became pretty clear to us that the value of that offering was fairly significant, and it made sense from a financial perspective to have that value accrue to Intel shareholders." Translation: we think we can eventually make a pile of money off this deal.

I suppose it’s not talking about the long term returns, why Intel is so confident to make a pile of money off this deal? (7.68 billion is big money even for the Chipzilla).

Well, it should be interesting to see what will happen couple of months later.

 

Just my 2 cents here, J

 

Fei

 

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