Intel with negative cash flow for 2001?
Several estimates for Intel for the year 2001 are in the 0.59 to 0.90 per share range in taxed earnings.
E. Rothdeutsch (Robertson Stephens) - 0.59 for 2001, 0.73 for 2002
Jonathan Joseph (Salomon Smith Barney) - 0.60 for 2001, 0.80 for 2002
Merrill Lynch - 0.81 for 2001, ??? for 2002
Taking the average of these 3 which made recent updates on Friday, that gives us
That implies positive cash flow of 6,938*0.667 or $4,625 million.
But Intel is vastly underdepreciating their current plants and equipment relative to the huge amount of capital spending they are planning. ($7.5B reaffirmed as Y2001 capital spending, $4.0B depreciation assumed). This is a negative cash flow of $3.5 billion, which leaves positive cash flow of only $1.125 billion.
Intel also entered the year in the strange situation that their accounts payable exceeded their accounts receivable by $2.176 billion. To the extent this number comes down, there will be negative cash flow which could easily eat up the entire $1.125 Billion that is left.
If Intel does not cut the dividend, they will have to pay $0.54 billion from their cash flow.
Finally, any growth in inventories is a negative cash flow item. Intel has already said that their inventories will grow considerably from the $2.24 billion level at the end of the year.
Intel spent $2.7 billion acquiring companies last year. Without any expenditures, their cash balance will be dropping all during 2001. If all of the above are included, assuming just a 0.5B growth in inventories, "only" $2B in acquisitions, equalization of accounts receivable and payable, Intel's cash balance will drop by $4.09 Billion in 2001, from $13.8 B to $9.7 B.
Petz |
