INTEL’S shares rose more than 3 per cent before the bell on Friday (Aug 30), as a report of the struggling chipmaker exploring options that could include a merger or a split induced some investor enthusiasm after one of the stock’s worst slumps in decades.
The company is working with investment bankers and considering various options, such as separating its flagship product business from its money-losing manufacturing unit, Bloomberg News reported on Thursday.
Intel is also discussing potentially scrapping some factory projects, the report said.
Building and expanding chip production sites is at the core of Intel’s turnaround efforts focused on becoming a contract manufacturer for other chip firms – a capital intensive undertaking that has strained the company’s finances.
Intel’s market value was set to rise by nearly US$3 billion on Friday, after falling below the US$100 billion mark earlier in August for the first time in three decades.
The report provided some relief to investors, many of whom see Intel splitting its business as an ideal option as the company trudges through the artificial intelligence era and trails chipmakers like Nvidia and AMD.
Intel’s shares have fallen about 60 per cent so far this year, compared with a less than 2 per cent year-to-date drop for AMD. Nvidia’s shares have more than doubled in value this year.
Intel’s disappointing quarterly report earlier in August, coupled with the company pausing its dividend and announcing lay-offs impacting 15 per cent of its workforce, have deepened the stock’s slump.
The stock trades at about 24 times expected earnings, compared with a price-to-earnings ratio of 30.6 for AMD. Nvidia trades at 33.7 times expected earnings. REUTERS
