Companies also do not have to touch their cash mountains which could result in them having to pay some tax and help the country out. While you might be struggling with your mortgage interest payment Intel gets a rates ranging from 0.75 percentage point to 1.50 points. It is important that you realise that the banks are happy to loan this cash out because Intel has a lot of cash in the bank, even if the money represents a gamble that the company might make money in the future.
Intel’s share price is fairly low as the company appears to have run out of ideas. Some are complete pessimists and think the company’s day has past. While Intel still sells more than 80 per cent PC chips, it has failed to make a dent in technologies for mobile phones and tablets. Either way Intel can get a good deal on its own share price.
Intel had $3.5 billion of cash and cash equivalents and $7 billion in short-term investments on hand at the end of September. It is the second time that Chipzilla has tapped the US in the last couple of years. Last September 2011, when it sold $5 billion in bonds.
It is so cheap at the moment
Chipzilla thinks its share price is too low at the moment and it is too good to pass up. According to the Wall Street Journal the company has popped to the bank to get borrowing $6 billion in part to buy back stock. It might be a surprise to people who are trying to get a mortgage, but the debt market is surprisingly forgiving at the moment. If you pop around to see your bank manager he might not give you a loan to buy a car, but he will loan a corporate $6 billion to buy back shares at a easy to pay back interest rate.
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Nick Farrell
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