Technology

Intel examines strategic options – Sales rumors and cost savings in focus

Intel is considering various measures to stabilize the struggling corporation, including potential spin-offs and the sale of business units. At the same time, significant cost reductions are to be implemented.

Eulerpool News Aug 31, 2024, 9:10 AM

Here's the translated heading in English:

"The beleaguered semiconductor company Intel is reportedly considering various strategic options to improve its financial situation.

Additionally, Intel's long-standing banks are considering potential mergers and acquisitions to get the company back on track. Less drastic measures, such as postponing expansion plans, are also being discussed. A company spokesperson declined to comment to Bloomberg.

Intel is under massive pressure: The company recorded a billion-dollar loss in the past quarter, and analysts are also predicting red numbers for the coming year. CEO Pat Gelsinger already responded at the beginning of August by announcing plans to cut approximately 15,000 jobs, which amounts to around 15 percent of the workforce. The goal is to save over ten billion dollars by the next year. In a letter to the staff, Gelsinger made it clear that Intel's cost structure is "not competitive" and requires drastic measures.

Gelsinger also plans to suspend dividend payments starting next quarter to reinvest the freed-up capital into the company. "Our costs are too high, our margins are too low," explained the CEO, emphasizing the need to streamline the portfolio.

Intel still plans to build a plant in Magdeburg costing around 30 billion euros, which is expected to start production from 2027. However, the company is still awaiting approvals, particularly for the billion-euro subsidies. Meanwhile, Intel has already secured financial investors for factories in the USA and Ireland, while plans for France and Italy have been put on hold due to changed economic conditions.

The crisis of the corporation is also reflected in the stock price: In the last three months, Intel's stock has lost more than a third of its value, and since the beginning of the year almost 60 percent. Currently, the stock is trading at its lowest level since 2013.

On Friday, the stock showed a slight recovery in pre-market trading on the NASDAQ and was temporarily up 1.79 percent at 20.49 USD.

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