Vs. 1 Which Stock to Decide on? - Samarth Patwardhan - Sachin Mylavarapu A Financial Analysis

2 Agenda  Company Overview  Products and Services  Recent Developments  Financial Analysis  Future Plans  Conclusion

3 Company Overview Intel Corporation  Incorporated as NM Electronics on July18 th 1968  Introduced first ever Microprocessor in 1971  Went public on October 13 th 1971  Sector – Technology, Industry – Semiconductor broad line(b = 2.1)  Today – World leader in the manufacturing of microprocessors

4 Company Overview Hitachi Corporation  1910 – Started as an Electrical Workshop  IPO – 1949 – Tokyo Stock Exchange, April’1982 – New York Stock Exchange  Sector – Consumer Goods, Industry – Electronic Equipment (b = 1.04)  Today, Hitachi has a broad range of products to offer in the market

5 Products and Services Intel Corporation  Classified in four main categories  Wide range of products  From wireless networking solutions to programmable hardware  Focus – Freedom of computing and reduction of infrastructure costs

6 Products and Services Hitachi Corporation  Much more diversified spectrum  Power and Industrial Systems, logistics services  Information and telecommunication systems, electronic devices  Media products, financial services  Focus - Creating e-business infrastructures that are tailored to specific individual needs

7 Recent Developments Intel corporation  In the last 2 years, seven acquisitions to broaden its product portfolio  Target the network and Communications markets  Shifted more than half of their R&D expenditure to server-related chipsets, microprocessors and platforms

8 Recent Developments Hitachi Corporation  First half of Fiscal’ 01 – 2% drop in Sales  Hit by a 90% price collapse for DRAM chips  October’01 – decision to spin off two if its groups  Recent reform measures include alliances, JV’s, acquisitions etc.

9 Financial Analysis  Growth  Liquidity  Gain  Market Value  Risk Factors  Future  Stock Performance The 7 – Point Criteria

10Overview  Excess Inventory  More Accounts receivable

11 Overview  Mode of Financing

12 Growth

13 Growth

14 Liquidity

15 Asset Utilization Gain

16 Hitachi – Uses Debt Intel – Less use of Debt Use of leverage Gain

17 Profit MarginGain  Cost of sales.  Money tied up in A/R and inventory

18 ROEHITINDINTCIND 1-Year 3.6%-7.45%3.6%-3.56% 3-Year-2.9%3.5%18.1%14.3% 5-Year-1%4.2%23.3%17.3% The Bottom LineGain

19 ROAHITINDINTCIND 1-Year0.9%-6.49%2.9%2.77% 3-Year-0.8%1.5%13.9%9.6% 5-Year-0.3%1.6%17%11.4%Gain

20 Price/Earnings Market Value HITIND INTC IND P/E

21 Risk Factors  Risk related to economic environment  Risk related to industrial sectors and business lines  Risks related to Management

22 Future Plans Intel corporation  Market share for processors – increase from 20% to 69% by ‘03  Fiber optics industry  Hyper-Threading technology  CEO – “In the future, all computers will communicate and all communication devices will compute.”

23 Future Plans Hitachi Corporation  April’ The Corporate Innovation Innovative (CII)  Reduce material purchasing costs by 20%  Inventory and A/R by 25%  Aim at doubling the sales from Fiscal 2000 to Fiscal 2002

24 3 – Month Performance Stock Performance

25 Semester Start – 4 th May, 1600 hrs Stock Performance

26 1 – Year Performance Stock Performance

27 5 – Year Performance Stock Performance

28 Summary Parameters HIT INTC Growth3 3 Liquidity2 3 Gain3 4 Market Value2 4 Risk Factors3 3 Future4 4 Stock Performance 3 3 Average

29 What to Do?  Look beyond numbers  See as an opportunity to buy low  If you already have it, hold it  Good for long term investment

30 Risk is the Name of the Game! Are You Willing to Take it?

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