Intel (INTC) rose on Friday after it was reported that the chip giant was considering major changes, including spinning off or selling its manufacturing business.
↑
X
Broadcom reports earnings: Will Nvidia’s influence lead to change?
Intel is in talks with investment bankers to explore various options for the semiconductor giant, Bloomberg reported, citing unnamed sources. The company is also considering scrapping factory projects and M&A deals, the report said. Intel is expected to present the options at a board meeting in September, the report said.
Intel shares rose more than 7% to 21.58 in morning trading, helping lift the Dow Industrial Average. The Santa Clara, California-based company has struggled recently against faster-growing rivals led by Nvidia (NVDA) and AMD (AMD). Intel also lags behind its competitors in the hottest trend currently sweeping the tech industry: artificial intelligence.
Intel missed Wall Street estimates when it reported earnings earlier this month. The results prompted Intel to announce a $10 billion cost-cutting plan and suspend its quarterly dividend.
Intel Stock: Challenging Quarterly Results
The company also issued a bleak outlook. “If Q2 results were contested, the Q3 outlook was terrible (setting a new record for the worst we’ve ever seen at the company),” Bernstein Research analyst Stacy Rasgon told clients in a note.
Spinning off or selling its manufacturing business would be a major change in Intel’s business. For decades, Intel dominated the chip industry with its state-of-the-art manufacturing technology. But the company has lost its dominant position in semiconductor manufacturing in recent years.
Intel shares are down more than 50% this year. The stock has a dismal Relative Strength rating of 6 out of a best-possible 99.
YOU MAY ALSO LIKE:
IBD Live: A New Tool for Daily Stock Market Analysis
Alnylam plummets, wipes out 50% gain this year as rival Pfizer falls short of expectations
Find winning stocks with MarketSurge pattern recognition and custom screens
How Nvidia is building a competitive advantage to fend off AI challengers
