Altera (FRA:ALR) Free Cash Flow : €420 Mil (TTM As of Sep. 2015)

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What is Altera Free Cash Flow?

Altera's total free cash flow for the months ended in Sep. 2015 was €141 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Sep. 2015 was €420 Mil.

Altera's Free Cash Flow per Share for the months ended in Sep. 2015 was €0.46. Its free cash flow per share for the trailing twelve months (TTM) ended in Sep. 2015 was €1.38.

During the past 12 months, the average Free Cash Flow per Share Growth Rate of Altera was -15.20% per year. During the past 3 years, the average Free Cash Flow per Share Growth Rate was -10.90% per year. During the past 5 years, the average Free Cash Flow per Share Growth Rate was 1.40% per year. During the past 10 years, the average Free Cash Flow per Share Growth Rate was 11.10% per year. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Free Cash Flow Growth Rate using Free Cash Flow per Share data.

During the past 13 years, Altera's highest 3-Year average Free Cash Flow per Share Growth Rate was 80.40% per year. The lowest was -14.80% per year. And the median was 9.70% per year.

Altera Free Cash Flow Historical Data

The historical data trend for Altera's Free Cash Flow can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Altera Free Cash Flow Chart

Altera Annual Data

Trend

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Free Cash Flow

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634.48

705.12

399.30

389.96

506.25

Altera Quarterly Data
	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15
Free Cash Flow	Get a 7-Day Free Trial															155.19	117.60	90.35	70.81	140.79

Altera Free Cash Flow Calculation

Free Cash Flow is considered one of the most important parameters to measure a company's earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any year's Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

Altera's Free Cash Flow for the fiscal year that ended in Dec. 2014 is calculated as

Free Cash Flow (A: Dec. 2014 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	540.3	+	-34.051
	=	506

Altera's Free Cash Flow for the quarter that ended in Sep. 2015 is calculated as

Free Cash Flow (Q: Sep. 2015 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	148.813	+	-8.024
	=	141

Free Cash Flow for the trailing twelve months (TTM) ended in Sep. 2015 adds up the quarterly data reported by the company within the most recent 12 months, which was €420 Mil.

Altera (FRA:ALR) Free Cash Flow Explanation

Free Cash Flow is very close to Warren Buffett's definition of Owner's Earnings, except that in Warren Buffett's Owner's Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owner's Earnings.

In Don Yacktman's calculation of forward rate of return, he uses Free Cash Flow for the calculation. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 1400:

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Sep15, Altera's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Sep15)	=	Normalized Free Cash Flow	/	Price	+	5-Year EBITDA Growth Rate
	=	1.55638095	/	45	+	-0.0898
	=	-5.52 %

Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.

Altera Free Cash Flow Related Terms

Thank you for viewing the detailed overview of Altera's Free Cash Flow provided by GuruFocus.com. Please click on the following links to see related term pages.

Altera (FRA:ALR) Business Description

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http://www.altera.com

Altera Corp was founded in 1983 and reincorporated in the State of Delaware in 1997. It designs and sells programmable logic devices, HardCopy application-specific integrated circuit devices, power system-on-chip devices, pre-defined design building blocks known as intellectual property cores, and associated development tools. Its PLDs, which consist of field-programmable gate arrays, including those referred to as systems-on-chip FPGAs which incorporate hard embedded processor cores, and complex programmable logic devices. FPGAs and CPLDs are standard semiconductor integrated circuits that are manufactured as standard chips that its customers program to perform desired logic and processing functions within their electronic systems. With its HardCopy devices it offers its customers a migration path from a PLD to a low-cost, high-volume, non-programmable implementation of their designs. Its customers can license IP cores for implementation of standard functions in their PLD designs. Customers develop, compile, and verify their PLD designs, and then program their designs into its PLDs using its proprietary development software, which operates on personal computers and engineering workstations. Its products serve a range of customers within the Telecom and Wireless, Industrial Automation, Military and Automotive, Networking, Computer and Storage and Other vertical markets. Its geographical segments include US, Japan, China, Europe and Other. Its customers design electronic systems that typically use three types of digital integrated circuits: Processors, which include microprocessors, microcontrollers, graphics processors, and digital signal processors, control central computing tasks and signal processing; Memory stores programming instructions and data; and Logic manages the interchange and manipulation of digital signals within a system. It classifies its products into three categories: New, Mainstream, and Mature and Other Products. New Products include the Stratix V, Stratix IV, Arria 10, Arria V, Arria II, Cyclone V, Cyclone IV, MAX 10 FPGAs, MAX V CPLDs, HardCopy IV devices and Enpirion PowerSoCs. Mainstream Products include the Stratix III, Cyclone III, MAX II and HardCopy III devices. Mature and Other Products include the Stratix II, Stratix, Arria GX, Cyclone II, Cyclone, Classic, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX 9000, HardCopy II, HardCopy, FLEXseries, APEX series, Mercury, Excalibur devices, configuration and other devices, intellectual property cores, and software and other tools. The Company competes with PLD vendors such as Lattice Semiconductor Corporation, Microsemi Corporation, and Xilinx Inc. Other semiconductor companies with whom it may compete includes Analog Devices Inc., Atmel Corporation, Avago Technologies, Broadcom Corporation, Cavium, Inc., Freescale Semiconductor Inc., GlobalFoundries Inc., HiSilicon Technologies Company, Intel Corporation ("Intel"), Linear Technology Corporation