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Comment by bhouston | Hacker News Reader

$16B is a great price for Mobileye's team, but I am not sure it is the best move for Intel. But I guess Intel will try to sell package deals to car markers and thus use this to try to keep NVIDIA and ARM from locking up the in-car market.

Thus it is a strategic move on Intel's part to fend off competitors rather than reflective of the intrinsic value of Mobileye.

BTW what was Mobileye's revenue last year and profit margin? About $350M in 2016, with probably $500M in 2017 it seems. So the multiple is around 30x revenue or so?

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Worth mentioning their factories in Israel are side by side and they already work together on projects in Jerusalem. A lot of Mobileye workers are ex-intel and sometimes vice versa.

The companies are a lot more linked than it seems.

Lot of consolidation in Autonomous Driving(AD) market. Samsung bought Harman, Google buying waze etc. As Continental CEO puts it "Traditional OEM/suppliers want to go from inside to outside, traditional IT companies are moving from outside to inside" ..a car basically. To track AD market this could be of interest to you https://www.2025ad.com/

They're buying a story for their stock. "our stock is our product" and all that.

There is urgency in the market around autonomous vehicles - for better or worse, it is believed that it will be the next big technology market - but I think that the Nvidia push around it is the main thing spurring Intel.

There is no such thing as intrinsic value. There is price and price ($16B) is determined by the market.

Talking about PE and multiples is pointless for tech companies where synergies and rapid adoption/changes are common.

>There is no such thing as intrinsic value

Intrinsic value usually refers to the present (discounted) value of future earnings.

>There is price and price ($16B) is determined by the market.

How is it determined if all valuation is supposed to be pointless?

>Talking about PE and multiples is pointless for tech companies where synergies and rapid adoption/changes are common

For a public company that has existed for almost two decades it absolutely makes sense to consider revenue multiples among other factors.

It may well be that the value of the company in Intel's hands is worth more than it is worth for other, non-strategic, investors. I agree that there is a lot of potential variability in tech, but that doesn't mean any fantasy price is right just because some people buy some shares at that price (which is what market prices mean)

> There is no such thing as intrinsic value. There is price and price ($16B) is determined by the market.

"Intrinsic value" is a basic financial term that is widely used and has a well defined meaning - just type the term into Google: https://en.wikipedia.org/wiki/Intrinsic_value_(finance)

Worst case in a few years they can write down 16 billion or some amount and they can lower their taxes. Effectively the government will pay for part of the purchase.

In the same way that the government pays for part of your salary?

More like tax credits. For example you can buy an EV and knock some money off your taxes. For example supposed a company makes 5 billion they have a 30% tax rate. They would owe 1.5 billion. Supposed they bought a company for 6 billion. They realized next year hey the company is really only worth $1 billion. They write off the 5 billion which offsets the 5 billion profits so instead of the paying 1.5 billion in taxes they pay 0. So government basically ended up paying 25% of the purchase price.

They also deduct your salary (and every other cost of doing business) from profits. So government basically ends up paying 25% of your salary.

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