Day: December 3, 2024

A little more than a month before Intel CEO Pat Gelsinger announced his sudden retirement on Monday, four of the company’s former board members wrote a public letter warning that the iconic U.S. chip giant was running out of time to turn its business around and urged the company to split itself into two.

In an op-ed published by Fortune in October, the board members said that splitting Intel into two companies—one focused on designing its own microprocessors, the other a “foundry” to manufacture chips for other companies—was the only way to “stem the bleeding” and ensure that the most advanced chips continue to be manufactured in America.

“Intel’s CEO, Pat Gelsinger, is a true technologist who played an important role in the company’s storied past. Today, he’s faced with a difficult decision: whether to break up the iconic company. He already announced a plan to establish Intel Foundry as an independent subsidiary inside Intel. But this doesn’t go far enough,” the former directors wrote, calling instead for Intel to split design and manufacturing businesses into two entirely separate companies.

Gelsinger made it his mission to revive Intel as a leading manufacturer when he returned to the company as CEO in 2021, after a stint leading VMWare. When he took the job, Intel was grappling with manufacturing problems that had caused it to lose its lead to Taiwan’s TSMC in terms of producing the most advanced chips. Meanwhile, demand for AI-optimized chips made by Nvidia have eaten into Intel’s sales.

The U.S. government has committed nearly $8 billion in grants to Intel through the CHIPS Act.

In their October op-ed, the former board members—David B. Yoffie, Reed Hundt, Charlene Barshefsky, and James Plummer—said that the U.S. government should make its financial assistance contingent on Intel splitting itself into two companies.

“The government has the leverage to force Intel down a better path—and it must use it now.”

While the full details surrounding Gelsinger’s surprise exit have yet to be reported, the open letter from the former Intel directors provide a valuable glimpse at the challenges facing the CEO in his final weeks at the company.

This story was originally featured on Fortune.com

(Bloomberg) — Just over a month after announcing plans to raise $21 billion through stock sales to help fund additional purchases of Bitcoin, MicroStrategy Inc. is already almost halfway to its goal.

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The company sold 3.7 million shares over the past week and used the proceeds to buy another $1.5 billion worth of Bitcoin, the fourth consecutive weekly purchase announced by the crypto hedge fund proxy.

The Tysons Corner, Virginia-based firm has only approximately $11.3 billion of stock issuance under its so-called at-the-market share program left to reach its three year goal, according to data compiled by Bloomberg. The company also aims to raise $21 billion through fixed income securities by 2027 and has been increasing those offerings as well.

Since the election of President-elect Donald Trump, who is expected to create a more favorable regulatory environment for crypto, MicroStrategy has leaned into its Bitcoin acquisition strategy, Benchmark analyst Mark Palmer said in an interview. MicroStrategy has already surpassed the amount it planned to raise from stock issuance in 2025.

“One of the questions that remains to be answered is whether this implies that the ultimate size of this initiative will exceed the $42 billion that the company had targeted, or if it’s simply a matter that those issuances and purchases are being pulled forward,” Palmer said.

MicroStrategy acquired 15,400 tokens for an average price of approximately $95,976 from Nov. 25 through Dec. 1, according to an US Securities and Exchange Commission filing on Monday. The firm has purchased over $13.5 billion since Nov. 11, and now holds around $38 billion in Bitcoin.

MicroStrategy co-founder and Chairman Michael Saylor has captured the attention of Wall Street by turning the enterprise software maker into what he calls a “Bitcoin Treasury” company. The firm’s shares have surged more than 500% this year, outperforming almost every other major stock. MicroStrategy has been funding the sales through the sale of convertible notes and at-the-market share offerings.

Other companies are seeking to emulate this strategy. MARA Holdings Inc., a crypto mining company, announced on Monday that it had acquired $618 million worth of Bitcoin over the past two months. The company also announced a $700 million convertible senior note offering, with some of the net proceeds going toward buying more Bitcoin.

Crypto mining stocks have underperformed this year after the reward for mining Bitcoin was cut in half in April. This lead to miners like MARA, holding onto Bitcoin and purchasing new tokens under this Bitcoin treasury strategy. MARA’s shares dropped as much as 44% earlier this year, but are now up 8% year-to-date.

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WASHINGTON (AP) — A top Federal Reserve official said Monday that he is leaning toward supporting an interest rate cut when the Fed meets in two weeks but that evidence of persistent inflation before then could cause him to change that view.

Speaking at George Washington University, Christopher Waller, a key member of the Fed’s Board of Governors, said he was confident that inflation is headed lower and that the central bank will likely keep reducing its key rate, which affects many consumer and business loans.

But he noted that there’s a risk that inflation “may be getting stuck above” the Fed’s 2% target, which would support an argument for keeping the Fed’s rate unchanged this month.

“At present, I lean toward supporting a cut to the policy rate at our December meeting,” Waller said in his remarks to a conference held by the American Institute for Economic Research. “But that decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation.”

Waller’s caution reflects a notable shift in the economic and inflation outlook in the past month or so. Growth in consumer spending and the broader economy was robust in the July-September quarter. In addition, inflation picked up in October after having slowed for most of this year.

And Donald Trump’s election victory has raised the prospect of widespread tariffs and mass deportations of migrants, both of which could elevate inflation. Some economists say they think the Fed might decide to cut its rate more slowly to allow time to evaluate the effects of Trump’s policies.

With inflation having steadily fallen from its peak in 2022, the Fed reduced its key rate by a half-point in September and by a quarter-point in November. And it signaled in September that it expected to announce another quarter-point cut later this month. Yet inflation has remained above the Fed’s target level, clouding the Fed’s next step.

In October, “core” inflation, which excludes volatile food and energy costs, accelerated a bit. It rose 2.8% compared with a year earlier, up from 2.7% in September.

Waller stressed that if future economic reports showed inflation or growth deviating from the Fed’s expected paths, he could favor keeping rates unchanged this month.

“If the data we receive between today and the next meeting surprise in a way that suggests our forecasts of slowing inflation and a moderating but still-solid economy are wrong, then I will be supportive of holding the policy rate constant,” he said.

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