- Intel shares rose 9% on Friday following the Bloomberg article.
- The semiconductor company is in talks with Wall Street banks to develop a modern strategy.
- The company may spin off its foundry business again after its recent reactivation.
- INTC shares are currently trading at their highest level since the August 2 earnings collapse.
Intelligence (INTC)The struggling semiconductor giant jumped 9% on Friday after the company disclosed internal discussions about spinning off its foundry business and refocusing on chip design.
INTC’s stock price hit $22.12, its highest since a acute decline on Aug. 2 following the release of earnings that cost Intel $1.6 billion.
As the smallest member Dow Jones Industrial Average (DJIA)Intel’s rally was unable to impact the index, which fell 0.2% despite tiny gains in the S&P 500 and NASDAQ.
Intel Stock News
Bloomberg published a story Friday that appears to be a planned leak from the C suite. The article said the half-century-old semiconductor maker is working with bankers from Goldman Sachs and Morgan Stanley to develop a modern strategy.
Discussions appear to be in the early stages, but the idea of re-separating the foundry and design businesses is back on the table. It would be a 180-degree turn for CEO Pat Gelsinger, whose main plan since returning to Intel in 2021 has been to compete with Taiwan Semiconductor (TSM) in the semiconductor manufacturing segment of the business.
For now, though, Intel remains the largest client of its outside foundry business. With losses exploding, some bankers believe it is time to at least scale back some of its massive investment projects.
Board member Lip-Bu Tan, who has the most experience in chipmaking, left Intel’s board last week. However, there have been rumors that Tan may leave the board to advise an outside committee of the spin-off. TF International Securities analyst Ming-Chi Kuo reported the following on X:
The tweet appeared on platform X on August 30, 2024.
If this is indeed the case, then discussions must be more advanced than initially estimated in the Bloomberg article.
In featherlight of the latest quarter’s results, Intel laid off 15,000 workers and suspended the dividend it had paid quarterly since 2013. The current dividend began after being suspended in 2003.
Gelsinger was blunt at an industry conference this week: “We’ve been working hard to address these issues, and when we announced our earnings, we were determined to provide a clear picture of where we are, but also some of the next steps we need to take. And of course, the market has not responded positively.”
Intel Stock Chart
Intel shares have been trading at 2013 levels for the past month. This is below the previous pullback from October 2022 to February 2023 when shares fell to support at $24.90.
The intraday high of $22.12 is a good sign for bulls as it is above the August 2 high of $21.98. This modern high could mean that $24.90 is back on the table. Of course, the real target is the August 1 low of $28.89 as traders love to fill gaps, but that level could still be a ways off. Gelsinger has a lot of work to do.
INTC Daily Stock Chart
