Dow-ward spiral: Intel share price drop could see it delisted from blue-chip index
- Reference: 1725380108
- News link: https://www.theregister.co.uk/2024/09/03/intel_share_price_drop/
- Source link:
The Santa Clara-based biz was one of the first tech companies to join the blue-chip stock market index in 1999, but financial analysts expect the megacorp may be removed from the Dow, according to [1]Reuters , after a more than 50 percent plunge in its stock price since the start of the year.
Being delisted from the Dow Jones would be another blow to Intel's reputation following [2]technical issues with the Raptor Lake processors, plus confirmation it was suspending its quarterly dividend to investors and [3]laying off more than 16,000 staff , as outlined during its most recent earnings announcement.
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We asked Intel to comment.
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Last week, Intel chief Pat Gelsinger [7]acknowledged the problems his once seemingly unstoppable behemoth is facing in its restructuring efforts, but insisted he was focused on the steps needed to get back to the top of its game.
Reports indicate that he and Intel's directors are working with investment bankers to try to identify a route out of the company's financial woes, including actions as drastic as a spin-off of its foundry business or putting on hold some of its plans to build new semiconductor fabrication plants.
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Updates since last week suggest the options that Gelsinger will present to Intel's board later this month may include selling off business units, such as the Altera programmable logic (FPGA) division it [9]acquired for $16.7 billion in 2015.
Some industry observers think this could be a viable move for Intel, with Taiwanese publication [10]TechNews suggesting that longstanding rival AMD may even be a potential buyer as the company seeks to expand its own FPGA product portfolio.
[11]Gelsinger opens up about Intel troubles amid talk of possible split
[12]Intel's Software Guard Extensions broken? Don't panic
[13]Intel enlists Morgan Stanley to defend against activist investors
[14]Intel, already adrift, now Armless too
Other expert opinions have include asking the US government to stump up more CHIPS Act cash for the ailing Silicon Valley giant, and ensuring Intel's foundry business gets as many defense-related silicon manufacturing contracts as possible.
Revenue at Intel's foundry biz declined in 2023, leading to a [15]$7 billion operating loss , so the manufacturing side clearly needs support while Gelsinger tries to reshape it into a contract chipmaking concern akin to TSMC.
Other more left-field suggestions include selling off the CPU business and focusing on the foundry side, but as [16]MarketWatch points out, Intel's product teams are essentially the only customer for Intel Foundry Services currently, and the manufacturing arm is not capable of standing on its own given the current level of losses.
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It seems Gelsinger's turnaround plans for the chip giant may prove to have been poorly timed, and while they make sense, Intel needs enough revenue to invest in order to make it a success. Otherwise Chipzilla might well end up as Chipzooky. ®
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[1] https://www.reuters.com/technology/intels-dow-status-under-threat-struggling-chipmakers-shares-plunge-2024-09-03/
[2] https://www.theregister.com/2024/07/23/intel_raptor_lake_instability_fix/
[3] https://www.theregister.com/2024/08/01/intel_to_ax_headcount/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZteHAmw1q7ksbMC_IZ8XQQAAAcI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZteHAmw1q7ksbMC_IZ8XQQAAAcI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZteHAmw1q7ksbMC_IZ8XQQAAAcI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2024/08/30/gelsinger_discusses_intel_troubles/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZteHAmw1q7ksbMC_IZ8XQQAAAcI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2015/06/01/intel_snaps_up_altera_for_16_7bn/
[10] https://technews.tw/2024/09/02/intel-pat-gelsinger-altera-amd/
[11] https://www.theregister.com/2024/08/30/gelsinger_discusses_intel_troubles/
[12] https://www.theregister.com/2024/08/27/intel_root_key_xeons/
[13] https://www.theregister.com/2024/08/26/intel_activist_investors/
[14] https://www.theregister.com/2024/08/14/intel_sells_arm_shares/
[15] https://www.theregister.com/2024/04/03/intel_foundry_losses_reorg/
[16] https://www.marketwatch.com/story/intels-big-turnaround-plan-is-now-looking-very-expensive-and-poorly-timed-1748f679
[17] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZteHAmw1q7ksbMC_IZ8XQQAAAcI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[18] https://whitepapers.theregister.com/
Re : Popcorn.
Hey @zippy. Did you put the beer in the fridge?
Altera to AMD? Putting Xilinx and Altera under the same roof? No sane regulator would ever let that happen. Although…
So it's delisted ?
Does that impact its production capacity ? No. It just impacts idiots who decide who's good on Wall Street.
Fuck Wall Street. Intel is a company that produces . It's share price is only important to useless people who gamble on it.
The rest of the world is interested in its products.
Re: So it's delisted ?
> It's share price is only important to useless people who gamble on it.
And to people who lend it money to build new chips. And to staff who get stock options.
So a delisted Intel just has to borrow at interest rates normally associated with loan providers who carry baseball bats, and has to find money to pay engineers more real $$$ to make up for the risk that your job won't be around next year.
Re: So it's delisted ?
> The rest of the world is interested in its products.
Badly manufactured products with degrading performance even when run at stock settings.
A loss of reputation can be a benefit for the current leaders, they can take more risks now because there's little left to lose. Intel is a strategic part of US dominance, I imagine there will be safeguards from the govt to avoid true tailspin effects.
"Altera programmable logic (FPGA) division it acquired for $16.7 billion in 2015."
Is it likely to get that sort of cash now? Better? Worse?
Guess we'll find out.
Of course it's still joined at the hip with the we-are-not-a-desktop monopoly company.*
*Hint when you have to bail out your largest competitor to stop looking like a monopoly to the DoJ, you kind of are.
Delisting from The Dow Jones Industrial Average would be fairly catastrophic for Intel’s ability to manage its cash flow. All Index linked funds (pension funds etc) would have to sell their Intel holdings - which is a huge amount of selling at once. When that happens, the share price will naturally fall and it will make short term borrowing on bonds very much more expensive for Intel which will further reduce the stability of the share price. Major capital investment would likely stop immediately - under construction Fab plants would likely be ‘paused’ or new ‘partnerships’ announced. But demise is often quite slow - Both Sears and Kodak struggled on for 8 years after delisting before being wound up.
I would be astonished if Pat G, the CEO, was still in place 6months after delisting, should that occur.
Not even close
Intel should be just fine imho. They've fired up mass production of [1]Intel 4 in Ireland , they've received and installed the very first [2]high-NA EUV litho machine from ASML, they've got their 128 P-core Rock-solid Granite Rapids chip coming out soon, right in time to compete with AMD's 128 Zen-core Turin, they've got Aurora on its way to 75% efficiency and 1.5 ExaFlop/s of performance, they've got [3]Gaudi 3 that's 2x to 4x the perf of Gaudi 2, they're first in MCRDIMM/MRDIMM, and they've got [4]CPO for explosive AI scaling .
I don't see them turning into [5]Chipzooky just yet (the [6] "cowardly nephew" of Chipzilla that coughs up rings of magic blue smoke whenever he tries to breathe fire) ... but love the name!
Intel is no [7]Atos , whose share value went down from €72 to €0.72 over the past 4 years (1 cent on the euro is left in that stock) -- and yet, being strategic to the EU, Atos will (thankfully) survive. Intel went down from $50 to $20 in that same period ($10 of which occurred in "panic" on August 1), and will go back up on its own by early 2025 (buy now at $20, sell later at $30, $40, $50 ... ).
Luckily though, if needed, former French Finance Minister Bruno Le Maire, who singlehandedly saved France's manufactures, restaurants, hotels, artists, jobs, aeronautics, Renault, Air France, and even the whole of the [8]French economy , is now available to help Intel too ... ever since president Macron dissolved the Parliament here, on June 9, 2024, 85 days ago ... and there's still no new Finance Minister (nor Prime Minister, nor any Minister at all really ...). Who needs 'em?!
[1] https://www.theregister.com/2023/09/28/intel_fires_up_mass_production/
[2] https://www.intel.com/content/www/us/en/newsroom/news/intel-foundry-opens-new-frontier-chipmaking.html
[3] https://www.nextplatform.com/2024/04/09/with-gaudi-3-intel-can-sell-ai-accelerators-to-the-pytorch-masses/
[4] https://community.intel.com/t5/Blogs/Tech-Innovation/Artificial-Intelligence-AI/Intel-Shows-OCI-Optical-I-O-Chiplet-Co-packaged-with-CPU-at/post/1582541
[5] https://www.theregister.com/2020/03/02/intel_sever_cpu_share/
[6] https://en.wikipedia.org/wiki/Godzilla_(1978_TV_series)#Premise
[7] https://www.theregister.com/2024/07/15/atos_secures_funding_for_rescue/
[8] https://www.radiofrance.fr/franceinter/podcasts/dov-alfon-en-toute-subjectivite/dov-alfon-en-toute-subjectivite-du-lundi-03-juin-2024-9579673
Company "in trouble"...
...looks for Government handouts.
Isn't what the USA constantly (and hypocritically) complain about other other countries doing?
How long before the shareholders turn on Gelsinger and decide he's not up to the job? This is going to get interesting. Have I got time to put the popcorn on before it all kicks off?