(Reuters) – Shares of Intel rose more than 3 percent before the stock market bell on Friday, as a report that the struggling chipmaker is exploring options such as a merger or split sparked investor enthusiasm after one of the worst stock market declines in decades.
The company is working with investment bankers and considering several options, including spinning off its core product business from its money-losing manufacturing division, Bloomberg News reported Thursday.
Intel is also considering cutting some factory projects, the report said.
Building and expanding chip manufacturing facilities is at the heart of Intel’s transformation plans, which aim to become a contract manufacturer for other chipmakers, a capital-intensive endeavor that is straining the company’s finances.
Intel’s market value is set to rise by nearly $3 billion on Friday, after falling below the $100 billion mark for the first time in three decades earlier in August.
The report provided some relief to investors, many of whom see splitting up Intel’s business as an ideal option as the company struggles through the AI era and trails chipmakers like Nvidia and AMD.
Intel shares are down about 60% so far this year, compared to a decline of less than 2% for AMD this year. Nvidia shares have more than doubled in value this year.
Intel’s disappointing quarterly report earlier in August, combined with the fact that the company halted its dividend and announced layoffs affecting 15% of its workforce, further exacerbated the stock’s decline.
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.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath)
