Intel’s growth strategies
In the previous part of the series, we discussed how Intel’s (INTC) future growth will be led by data center and breakthrough technology in the personal computer space. Now let’s look at the strategies that the company will adopt to stay ahead of the competition and boost growth as the demand for its current products slows.
Summing up the company’s activities over the past few months, we can see that it is investing in technology through joint ventures, investment in startups, acquisitions, and R&D (research and development).
Intel’s cash position
In fiscal 3Q15, Intel reported operating cash flow of $5.7 billion. As of September 26, 2015, the company had cash reserves of $20.8 billion, up 34% YoY (year-over-year). This is because the company slowed its share buyback program from repurchasing 218 million shares in the first three quarters of 2014 to ~78 million shares in the first three quarters of 2015.
The company’s strong cash position indicates its potential to invest heavily in acquisitions and next generation technology.
Many data centers use FPGA (field-programmable gate arrays) chips alongside Intel’s Xeon chips to enhance their server speeds. According to estimates in Intel’s presentation, approximately one-third of cloud service providers will deploy FPGAs in their servers by 2020. Altera, with a 38% share, is the second biggest player in the FPGA market after Xilinx (XLNX), giving Intel a strong position in this space.
Intel’s chief executive officer Brian Krzanich stated that the impact of the Altera acquisition will likely be visible in fiscal 4Q15.
Investing in Startups
In September, Intel Capital announced its plan to invest $67 million in eight Chinese startups from varied spectrums such as cloud, robotics, embedded devices, big data, and data analytics. Companies like EMC (EMC) and Western Digital (WDC) are also investing in startups, especially in the cloud space.
In the next part of the series, we will understand Intel’s technology roadmap. If you are bullish about Intel, you can invest in the SPDR Dow Jones Industrial Average ETF (DIA), which has 1.3% exposure in the company’s stock.