What Was Intel’s Cash and Cash Flow Position in Fiscal 2Q15?



Intel’s cash, debt, and cash flow position

In this series, we’ve discussed Intel’s operating performance, margins, and EPS (earnings per share). In regards to its cash position, Intel’s (INTC) cash and short-term investments, debt, and OCF (operating cash flow) stood at $13.87 billion, $13.23 billion, and $3.4 billion in 2Q15, respectively.

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Intel’s dividends and buybacks

In fiscal 2Q15, Intel generated ~$3.4 billion in CFO (cash from operations)—compared to $4.4 billion in 1Q15. It paid cash dividends of $1.1 billion. It used $697 million to repurchase 22 million shares of stock. Previously, Intel had spent $4 billion and $750 million on stock buybacks in 4Q14 and 1Q15, respectively.

Investments in capex and R&D

Intel spent ~21% of its total revenue on R&D (research and development) in 2014. In 2Q15, it spent ~37% of its revenue on R&D. In the semiconductor space, capital and high R&D investment are necessary to maintain a competitive edge. Intel’s high R&D investment ensures its leadership in the semiconductor space.

Samsung (SSNLF), Qualcomm (QCOM), Micron Technology (MU), and SK Hynix are the other top four players in this market. According to a report published by Gartner in January 2015, 2014 was the 23rd consecutive year that Intel maintained its leadership position in the semiconductor space.

For full-year 2015, Intel has reduced its capex (capital expenditure) guidance again to $7.7 billion from the previous guidance of $8.7 billion. Earlier, it announced a reduction of its full-year capex forecast to $8.7 billion from $10 billion in April 2015. This will lead to lower depreciation. It will benefit margins. The transition to the next generation 14 nm (nanometer) is expected to improve yields. Again, this will aid in margin expansion.

You can consider investing in the Technology Select Sector SPDR Fund (XLK) to gain exposure to Intel. Intel accounts for about 3.55% of XLK.


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