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The initial investment is only 20B, and spending that money won't hurt their market cap because it's shifting money into new assets, which would be considered p
by asimpletune 5y ago
The initial investment is only 20B, and spending that money won't hurt their market cap because it's shifting money into new assets, which would be considered part of their valuation.
- totalZero 5y agoLong-term projects can hurt market cap because investors sometimes react negatively to investments that will return nothing for years and won't pay for themselves until perhaps a decade or more into the future. Many investors would rather see a $20B share buyback instead of a $20B greenfield project. All assets do not get priced at NAV by the market, even if the NAV is known. In this case, we don't know the future value of a major fab. We have no way of knowing future utilization and yield for the fab, so it'd be impossible to determine the timeframe for computing the present value of its earnings. It will be interesting to see how the market digests this news story in the coming weeks. The price of INTC could move markedly; earnings are coming up next week and there's an Investor Meeting scheduled for the middle of February.