- Tools for Investors
- Stock News
- Investing Ideas
- Econ & Policy
- Personal Finance
Return on Investments
Ross Seymore – Deutsche Bank: For Paul, if I look back between the last two years and then heading into what you just guided too for 2013, it seems like your CapEx and your OpEx are outgrowing revenues, and I guess if I partner that together with where the stock is trading valuation-wise, it really looks like investors are dubious as to when any returns are going to come from those investments. So, I guess the question after that is when do you see the investments come or the return on these investments coming? How long do you think this investment stage last and what are some of the mild markets we should look for to see those returns being generated?
Paul S. Otellini – President and CEO: Well, there’s two parts to the CapEx this year, I mean, two large parts of the CapEx this year, Ross. One is you are starting to see our first significant investments in brick-and-mortar and some equipment for the 450-milimeter transition which happens later part of this decade. We had to make those investments earlier. Those are – now that we’ve solidified our relationship and – contractual relationship with ASML, it gives us line of sight to that conversion, and therefore are in a better position to predict the exact timing and deploy capital for that. So, I would treat that as a more of an extraordinary event. This is not related to the day-to-day in terms of volume in ’14, ’15 and ’16. The CapEx that we are projecting on a base level, and if you look $13 billion minus the $2 billion is $11 billion, which is about what we spend last year.
And, as I look forward into the business in ’14 and ’15, as we finish up the 14-nanometer factories and begin deployment – the construction of and equipping the 10-nanometer factories, we need those factories principally for our view of the computing market, and in that I would include tablets and certainly the data center. So, as we look at it, it gets used. Remember the leading edge capacity is the lowest cost for us on per unit basis. The higher performance and the lowest power, so regardless of what you think the size of the market is the most-leading edge fabs are the single greatest assets that we have.
Ross Seymore – Deutsche Bank: I guess as my one follow-up…
Don't miss one of the biggest bull markets in history! Covers Gold, Silver, Gold & Silver stocks, and miners.
There's always a bull market in some sector! Find the best opportunities in commodities.