President Trump has proposed a tax reform that could be a huge bonus to Intel. As reported by the Wall Street Journal last week:
“Intel Corp. could repatriate a significant amount of its overseas
cash if a U.S. corporate tax overhaul lowers the rate to 10% or less,
said the company’s treasurer, Ravi Jacob.
Intel has about $20 billion in cash, said Mr. Jacob Thursday, speaking at a treasury conference in Barcelona. Companies currently have to pay a tax rate of 35% if they repatriate cash held overseas.
“We have more than 50% of our cash held in offshore entities that we cannot access without paying the 35%,” he said.”
We did notice that the September/October Intel rally came just when the Trump tax reform proposals came back in to the spotlight. If they ever succeed, (and that’s a big if with the Trump administration at odds with both houses at the moment) it will be a huge bonus for Intel, but we suspect much of the recent gains were pricing in these positives.
There are still many hurdles ahead for the proposals, and it is worrying that much of rally may be based on hope. This of course means that it could be undone just as fast if things go the other way.
Intel has about $20 billion in cash, said Mr. Jacob Thursday, speaking at a treasury conference in Barcelona. Companies currently have to pay a tax rate of 35% if they repatriate cash held overseas.
“We have more than 50% of our cash held in offshore entities that we cannot access without paying the 35%,” he said.”
We did notice that the September/October Intel rally came just when the Trump tax reform proposals came back in to the spotlight. If they ever succeed, (and that’s a big if with the Trump administration at odds with both houses at the moment) it will be a huge bonus for Intel, but we suspect much of the recent gains were pricing in these positives.
There are still many hurdles ahead for the proposals, and it is worrying that much of rally may be based on hope. This of course means that it could be undone just as fast if things go the other way.
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