Qualcomm has reportedly considered the acquisition of certain segments of Intel’s chip design business to enhance its product offerings, reports Reuters, citing sources.
The mobile chipmaker has shown interest in Intel’s client PC design unit, among other divisions.
However, Qualcomm has not made any formal approach to Intel regarding a potential acquisition, according to an Intel spokesperson.
Intel, which recently faced financial challenges, including a second-quarter loss, staff reductions, and a pause on dividend payments, is said to be committed to its PC business.
The spokesperson emphasised that Intel remains “strongly dedicated to our PC business.”
This includes potentially selling the programmable chip unit Altera.
Qualcomm, with a market value of $184bn and known for its smartphone chips, has been contemplating the acquisition for several months, although plans have not been finalised and may change.
The interest from Qualcomm comes at a time when Intel’s PC client business revenue has declined by 8% to $29.3bn last year, reflecting the broader weakness in the PC market.
Intel’s client group, once famed for its “Intel Inside” campaign, produces laptop and desktop chips that are widely used globally.
Intel executives believe that the advent of artificial intelligence in PCs will lead to increased consumer demand and sales.
In a recent setback for Intel, its contract manufacturing business failed tests with Broadcom, indicating that Intel’s advanced manufacturing process, known as 18A, is not ready for high-volume production.
The tests involved sending silicon wafers through the 18A process, with Broadcom receiving the wafers last month.
After evaluation, it was determined that the process requires further development.
A representative for Broadcom said the company is “evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation.”
“Qualcomm considering acquiring parts of Intel’s chip business ” was originally created and published by Verdict, a GlobalData owned brand.
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Martin Varsavsky is one of more than 12,000 multimillionaires living in Spain who were blindsided by a “solidarity” tax at the end of 2022.
Pedro Sánchez’s Socialist government introduced a temporary levy of 1.7pc on citizens whose net wealth exceeds €3m (£2.6m) rising to 3.5pc for those worth €10m or more.
The Argentine-born Varsavsky, who has founded five billion-dollar companies spanning telecoms to renewable energy, was hit by a significant tax bill.
“I felt cheated,” he says.
The 64-year-old, who now runs a network of fertility clinics in North America, says he’s thought about leaving Madrid ever since.
“I went to visit Portugal, Italy and also Florida, where I used to live,” Varsavsky says.
“What’s especially egregious in my case is that now I make all my money in the US. So Spain is making all this money out of me. So I have all the incentives in the world to move away, and I will.”
Some have already gone. The “impuesto de solidaridad a las grandes fortunas” raised just €632m in 2022, representing 0.1pc of all taxpayers in Spain.
Despite the relatively low yield, Labour’s union paymasters are already calling for the UK Government to follow suit. The Tax Justice Network claims as much as £24bn a year could be raised from the UK if it copied Spain’s model.
Sharon Graham, the leader of Unite, has urged Rachel Reeves, the Chancellor, to announce a 1pc tax on Britain’s richest 1pc. “It’s time for a wealth tax on the super-rich and a tax on excess profits. We don’t need more excuses about fiscal responsibility or talk of wealth creation,” Graham said last month.
The G20 is also exploring plans for a global minimum tax on the world’s 3,000 billionaires.
The drive is being led by Gabriel Zucman, the tax guru behind US senator Elizabeth Warren’s proposal of a 2pc levy on the world’s richest. He claims it could unlock $250bn (£189bn) a year.
However, the issue remains highly contentious, and revenues have usually disappointed.
Esther Villa, a lawyer at Osborne Clarke in Barcelona, says the levy had a chilling effect on Spain’s entrepreneurs.
“The initial response from many of my clients was a feeling of being punished for being successful.” But she also notes that initial revenues were disappointing.
“When the solidarity tax was adopted, the government made a big deal of what they expected to collect, but what was collected in 2023 is less than half what was anticipated,” adds Villa.
Still, Villa says one reason revenues flowed in in the first year was people had very little time to plan before being hit with their first bill.
But she says this is unlikely to be repeated.
“Feedback from clients suggests they are aware of the things they have to do in terms of how to structure their assets to make sure that the impact is as efficient as possible.”
Together with Spain’s existing wealth tax, the country raised €1.9bn from various levies in 2022.
While the figure is not to be sneered at, it’s also the equivalent of making all of Spain’s 1.2m dollar millionaires pay just over €1,500 each.
Meanwhile, the number of countries imposing a wealth tax has dwindled. Just over three decades ago in 1990, 12 countries had one. Today, only Norway, Spain, and Switzerland remain and the yields in these countries are low while the deterrents are high.
Emmanuel Macron ditched France’s wealth tax just over five years ago following an exodus of billionaires to destinations including the UK.
According to the OECD, countries have ditched them because they cost too much to administer, distort investment decisions and punish people who are asset-rich but cash-poor. The people it’s designed to target can also leave if they want to.
In short, wealth taxes don’t really raise much cash.
Denis Healey, then-Labour chancellor, wrote in his memoirs: “We had committed ourselves to a wealth tax; but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”
Chris Sanger, the global head of tax policy at EY, says the costs of administering a wealth tax should not be underestimated.
“The problem is the mechanism for calculating wealth. Because every year you’ve got to calculate the value of an asset that doesn’t always have a ready price,” says Sanger.
“It’s easy if it’s stocks and shares that are quoted, but if you’ve got a house that you’ve owned, how much has that increased in value? If it’s a painting sitting on the wall, has that gone up in value?
“Of course, people sometimes do this once upon death or for inheritance tax purposes where you actually have to go and get a valuation. But doing that once is very different from doing that every year for a wealth tax.”
Sanger says this can make getting wealth taxes in an arduous business, while the basic premise of a wealth tax sends out a signal that countries aren’t open for business.
“There are theoretical benefits for going for a wealth tax,” he adds. “The challenge with one is as the rate gets higher, it becomes more and more of a deterrent for people to actually have wealth. It’s also a tax that needs to be collected.”
Villa, at Osborne Clarke, admits that Spain’s tax grab has so far not led to billionaires leaving Spain in their droves.
“There has been no exodus. Lots of people took it in their stride the fact that it was supposed to be temporary. Having said that, I think there’s a high likelihood that it will be upheld for 2024, and subsequent years.”
For all his complaints, Varsavsky is also still living in Madrid.
“It’s a family thing,” he says. “My children are still at school here, and they have their friends and everything here. It’s difficult because of course taxes are not the only thing. I have seven children: two live in London, one lives in New York and then the other four in Madrid.”
However, he is leaving his options open. “There’s an issue of age. It’s not the same thing to tax a person who’s 30, who has many more years to make money, than to tax a person who is 70 and needs to have savings,” adds Varsavsky.
“If you start taking 3.5pc of their money year after year, then you end up having much less money at a time in your life when you can’t even go out and make more. So it’s pretty unattractive for anyone who has done moderately well in life to stay in Spain.”
Varsavsky says he’s banking on a change of administration, with Sanchez currently leading a precarious minority government.
“My hope here is that this will be short-lived, as the title of the tax is called, and they will go back to the way things used to be,” he adds.
“If not, eventually I will move out. Because it gets to a point where, in my sixties, it makes no sense to be in a place where my savings are taken away.
“It’s a pity, because Spain is a wonderful country to live in, but not if you are being forced to be impoverished year after year.”
SpaceX‘s factory in Bastrop, Texas has built a million Starlink standard hardware kits, the company announced on X on Monday.
What Happened: “Just 10 months after opening our factory in Bastrop, Texas, the Starlink team there has built 1 million Starlink Standard kits!,” the company wrote on the social media platform X while adding that the team is ramping production to meet surging demand.
Just 10 months after opening our factory in Bastrop, Texas, the Starlink team there has built 1 million Starlink Standard kits!
The team is ramping production to meet the surging demand for high-speed internet around the world 🛰️🌎❤️ pic.twitter.com/xOjgJRdSHM
Starlink is the satellite internet segment of Elon Musk‘s SpaceX. The company aims to provide low-latency internet to subscribers worldwide with a network of satellites in low-Earth orbit.
The standard hardware refers to the hardware ideal for residential use and everyday internet applications like streaming and video calls. It is currently priced at $299 in the U.S.
Why It Matters: SpaceX said in May that Starlink is connecting over 3 million people with high-speed internet. The facility is available over across 100 countries, territories, and other markets.
According to data from astronomer Jonathan McDowell, SpaceX has launched over 7000 Starlink satellites into space, of which 6337 are working, to provide the service.
Starlink achieved breakeven cash flow in November 2023, rekindling hopes for an IPO of the segment. In late 2020, Musk said that SpaceX would probably IPO Starlink when its revenue growth is ‘smooth and predictable.’
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Tiny homes have become increasingly popular in recent years as many look for ways to cut costs and reduce the size of their carbon footprints. One young DIYer figured out a way to turn his tiny house into a giant moneymaker.
What To Know: According to a CNBC report, 34-year-old Ivan Ellis Nanney bought a parcel of land just outside of Boise, Idaho, for $17,000, and spent another $17,000 building a tiny home on it. The property now generates close to $50,000 in revenue a year.
He originally listed it on Airbnb Inc ABNB in 2019 with intentions to live in it for half of the year, but the overwhelming demand led him to move out for good and start listing the miniature home year-round.
“It became very popular. It just didn’t make sense for me to stay there at all. [The income] has become almost completely passive,” Nanney told CNBC.
The tiny home has been such a success for the Idaho native that he is working on two more rental homes. Here’s how he managed to build the first.
Piece By Piece: The lot, which he purchased back in 2015, came with an abandoned house. He spent close to three and a half years tearing down the old structure and then building the new one using secondhand building materials.
Nanney was also able to hook up water lines and wire the home for electricity himself, which is quite the cost saver.
Now he generates a majority of his income from the home and only works about two hours each week setting up bookings. He pays someone to clean the place for about $150 a week and he returns to the location at least a couple of times each year to perform routine maintenance.
Most of the rest of his time is spent traveling, although he also makes some extra money helping other nearby Airbnb hosts with upkeep for their properties.
And then there are the two additional properties he’s working on. One is a nearby house that he bought in 2021 with a down payment of less than $8,000. The other is in the mountains of Idaho, but he’s splitting that one with four members of his family.
“You can increase your income and reduce your debt while maximizing assets you already own. I don’t like having things sit around when someone could be benefiting from it,” Nanney told CNBC.
Read Next:
This story is part of a new series of features on the subject of success, Benzinga Inspire. Some elements of this story were previously reported by Benzinga and it has been updated.
Image created using artificial intelligence via Midjourney.
Celsius Holdings’(NASDAQ: CELH) energy drink has become wildly popular over the past several years. The company’s rampant sales growth caught PepsiCo‘s attention, leading to an investment and distribution partnership and sizzling investment returns for shareholders. However, Celsius has lost some of its luster throughout this year. The stock has now fallen a whopping 66% from its high.
No stock goes up forever. The question is whether investors should buy the dip or if Celsius’ time in the sun is over.
A sharp decline can completely change a stock’s outlook. Here is why Celsius fell and why investors should consider buying the stock now.
Resetting expectations
Celsius’ energy drink products enjoyed viral popularity beginning during the COVID-19 pandemic. The brand appeals to young and health-conscious consumers with its “Live Fit” marketing angle. Revenue growth accelerated to more than 50% year over year in the pandemic’s early days, then spiked once PepsiCo jumped into the picture in 2022.
PepsiCo has become Celsius’ primary distribution partner, opening up access to more points of sale and helping Celsius launch in new markets. Year-over-year sales growth peaked at more than 175%. But with high growth comes high expectations. Celsius’ price-to-sales (P/S) ratio jumped to 17, more than double that of its chief competitor, Monster Beverage.
CELH Revenue (Quarterly YoY Growth) Chart
As you can see above, growth rates have slowed dramatically. Not only is triple-digit growth a tough follow-up act, but PepsiCo’s initial surge to fill inventories pulled some growth forward. In its Q2 earnings call, management noted that PepsiCo’s inventory movements created a headwind of $20 million to $30 million during the quarter. Celsius is a much larger company today with $1.5 billion in annual sales; it’s unlikely that revenue will grow by triple digits again.
In other words, the market has reset its expectations (valuation) for Celsius to a new reality of slower growth.
Looking forward
Celsius isn’t done growing just because the business isn’t growing at 100% anymore. The company’s $402 million in Q2 sales was still a 23% increase over the prior year. If you add in the $20 million to $30 million headwind due to PepsiCo’s inventory, growth would have been at least 5 percentage points higher. There are two take-home points for investors here.
First, Celsius is still gaining market share from its competition. The company’s North American sales grew 23% year over year in Q2. The energy drink market isn’t growing that fast; according to Mordor Intelligence, the energy drink market in North America will grow at a low-single-digit rate through 2030. Mathematically, Celsius’ growth is coming from somewhere. Monster Beverage is a top competitor and only grew North American sales by 3% year over year in Q2. Celsius is likely outperforming other brands.
Second, Celsius’ international growth story is very early. Success isn’t a given, but PepsiCo’s distribution support will significantly help. International sales grew 30% year over year in Q2 but represented just 5% of total sales, so it doesn’t move the needle. This year, Celsius launched in six new countries; the international growth story could become more important over time.
There is no reason Celsius can’t maintain double-digit sales growth for a while yet.
Assessing the stock’s long-term potential
Investors could be poised for strong investment returns if that’s the case.
Despite growing sales much faster than Monster, the stock is cheaper than Monster:
CELH PS Ratio Chart
Celsius is profitable under generally accepted accounting principles (GAAP) with similar profit margins to Monster, so it’s hard to argue that Celsius’ revenue isn’t as “high-quality” as Monster’s and would thus deserve a lower valuation. Instead, Celsius’ stock seems oversold and mispriced relative to its peers. The stock doesn’t need a higher P/S ratio if sales keep growing at a double-digit pace; the growth alone would drive the share price higher over time.
Investors shouldn’t let the adverse price action write the narrative about Celsius stock. The company is doing well, and the stock’s valuation more than compensates for slower long-term growth. The stock wasn’t a great buy at its highs, but it’s a compelling investment idea today.
Should you invest $1,000 in Celsius right now?
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Cousin Properties CUZ recently announced that it has entered into a lease arrangement with a Fortune 100 technology company for around 320,000 square feet of all of its Domain 12 property in Austin, TX.
The said customer is new to Cousins’ portfolio and will take up the ongoing lease from Meta Platforms, effective from Jan. 1, 2026, extending its maturity from 2031 to 2040.
Cousins’ Domain portfolio, spanning around 2.5 million square feet, is at present more than 99% leased, reflecting the solid demand for space. Delivered in 2020, Domain 12 exists near The Domain’s main dining and entertainment district.
This Cousins lifestyle office property’s offerings of amenities such as cafes, outdoor terraces, a fitness center and bike storage, with direct access to several hiking and bike trails, lead to a wholesome experience for its clients.
As per Colin Connolly, the president and chief executive officer of Cousins Properties, “We are excited that our teams found a creative solution to welcome another global technology innovator to a trophy property in The Domain.” He also asserted, “The Domain provides a highly amenitized experience that leading companies recognize as a critical tool to drive employee recruitment, retention, and culture.”
Cousins Properties Sees a Recovery in Demand
Cousins Properties is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in new leasing volume. For the six months ended June 2024, the company executed 77 leases for a total of 794,240 square feet of office space with a weighted average lease term of 7.8 years. This included 404,011 square feet of new leases, 268,210 square feet of renewal leases and 122,019 square feet of expansion leases.
Image Source: Cousins Properties
Going forward, Cousins Properties’ high-quality office portfolio, impressive tenant roster, opportunistic investments and developments in best sub-markets and strong balance sheet are expected to drive its growth. However, a continuation of the hybrid work environment and high supply in the office real estate market is expected to adversely impact its pricing power.
Over the past three months, shares of this Zacks Rank #2 (Buy) company have risen 24.3% compared with the industry’s upside of 16.7%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are Paramount Group PGRE and Lamar Advertising LAMR, each carrying a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Paramount Group’s 2024 FFO per share has been raised marginally northward over the past three months to 78 cents.
The Zacks consensus estimate for Lamar Advertising’s current-year FFO per share has been revised marginally upward over the past month to $8.09.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
The markets have kicked off September with a reprise of the swoon we saw in early August, making it clear that investors are not quite as sanguine as the politicians would like in this election year.
Bad news from the jobs reports is fueling fears that a recession could be on the way; the July numbers included a downward revision of more than 800,000 for the past year, and the August numbers missed expectations, coming in barely at maintenance level.
The commodity markets are also down in recent weeks, with oil losing all of the gains it saw earlier in the year. The drop in oil prices could signal potential economic trouble ahead, as it reflects weakened global demand and industrial slowdown – key indicators that a recession may be looming.
Watching the situation from JPMorgan Asset Management, portfolio manager Priya Misra says, “I think no market is really pricing in a reasonable chance of a recession, but the totality of data suggests that risks of a recession are growing. While there is so much hand-wringing about a 25bp or 50bp cut from the Fed in September, all markets will move if a recession is upon us. It will take a while for rate cuts to filter through into the economy.”
A smart investor will always have a plan for the worst case – and this scenario will naturally draw attention to dividend stocks. These shares generate an income stream no matter how the market rises or falls.
With this in mind, we’ve opened up the TipRanks database, and found div stocks with ‘Strong Buy’ ratings from the analysts that are yielding at least 10%, a solid return at any time. Here are the details on two of them.
MFA Financial(MFA)
The first stock we’ll look at is MFA Financial, a company in the specialty finance realm acting as a real estate investment trust (REIT). These companies operate in the world of real property and mortgage financing, investing in property purchases directly or in financing loans on real properties. MFA Financial invests mainly in residential real estate assets, primarily residential mortgage loans and residential mortgage-backed securities. The company is internally managed and publicly traded.
As of the end of Q2 this year, June 30, the company had a total residential whole loan balance of $9.2 billion and a total securities portfolio worth $863.3 million. During Q2, the company made $688.2 million in loan acquisitions and added $175.5 million in agency mortgage-backed securities to its holdings.
During the same period, MFA generated $53.49 million in net interest income, a figure that was up 20% year-over-year and beat the forecast by $330,000. The company’s non-GAAP earnings per share, at 44 cents, was up 10% from the prior year quarter and was 6 cents per share better than had been anticipated.
For dividend investors, the key point here is that MFA’s earnings fully covered the 35-cent common stock dividend. The dividend was declared on June 11, and paid out on July 31; at its current rate, the payment annualizes to $1.40 per common share and gives a forward yield of 11.4%. We should note that MFA has paid out $4.7 billion in cumulative dividends since going public in 1998.
For 5-star analyst Jay McCanless, of Wedbush, this stock is emerging from a transformative period and is primed for near-term gains. The analyst, who is rated in the top 1% of his peers by TipRanks, is especially impressed by the dividend here, and writes of the shares, “MFA performed near the middle of pack in our mREIT screen, as the company was not immune from the pressures impacting the overall group over the last few years. However, we believe that MFA has since been able to successfully rebuild itself on several fronts, and we believe that this positive transformation is being seen in more recent financial results, as the company has covered its dividend on an EAD basis for the last couple of years and thus far into 2024. We also view MFA’s current valuation as relatively attractive, given its ~11.5% dividend yield on what we view to be a fairly stable ongoing dividend.”
Overall, McCanless rates the stock as Outperform (Buy) with a $14 price target that suggests a 14%-plus upside for the coming year. With the dividend, that adds up to a total potential return of more than 25%. (To watch McCanless’ track record, click here)
While there are only 4 recent analyst reviews of this stock on file, they include 3 Buys to just 1 Hold, for a Strong Buy consensus rating. The stock has a trading price of $12.26 and an average price target of $13.13, implying a one-year upside of 7%. (See MFA stock forecast)
Golub Capital BDC(GBDC)
Next up on our list is a business development corporation, or BDC. Golub Capital provides the needed combinations of capital, credit, and financial services that keep the small- to mid-sized enterprise sector – the traditional driver of the American economy – afloat. These companies that make up Golub’s potential customer base are not always able to access financial services through the major banks, and firms like Golub pick up the slack.
That’s not to say that Golub operates at a small scale. Earlier this year, the company completed an approved merger with a sister firm, GBDC 3, under which the two companies combined their business and portfolio activities under the Golub Capital’s name and stock ticker. The merger was completed in June of this year, and the combined entity has approximately $8.8 billion in total assets, at fair value, and investments in 367 portfolio companies.
Golub’s portfolio is focused heavily on senior loans. 86% of the company’s investments are in first lien traditional senior loans, and 7% are in first lien one-stop instruments. The remaining 7% of the portfolio is in equity investments. Of Golub’s loan portfolio, 99% is in floating rate loans.
The most crucial aspect of Golub’s business is generating total returns for its investors. The company builds the foundation for this by cultivating a portfolio of high-quality clients, with repeat business. Golub is an experienced credit asset manager and understands the importance of not just building a portfolio at scale, but of maintaining the quality of the investments.
In the second quarter of this year, the quarter in which Golub completed its GBDC 3 acquisition, the company reported a total investment income of $171.27 million while the adj. investment income per share came in at 48 cents.
The company’s earnings more than covered the regular dividend payment, which was declared on August 5 for payment this coming September 27. The dividend, at 39 cents per common share, annualizes to $1.56 and yields ~10.6% going forward.
This stock caught the eye of Paul Johnson, from KBW, who is impressed by the overall quality of the company. He writes of Golub, “We believe Golub Capital is one of the highest quality BDCs in the sector, and the management team has deep experience in the middle market. We expect the portfolio at GBDC will be of higher quality than many BDC peers due to their focus on more senior debt assets. GBDC’s cost structure is one of the best in the sector with low fees, lower operating expenses, and significant shareholder protections.”
Quantifying his stance, Johnson puts an Outperform (Buy) rating on GBDC, with a price target of $16.50 implying an upside of 12% in the next 12 months. Add in the forward dividend yield, the return could be more than 22.5%. (To watch Johnson’s track record, click here)
This is another stock with 4 recent analyst reviews and a 3 to 1 split favoring Buy over Hold for a Strong Buy consensus rating. The shares are priced at $14.76 and their $16.50 average price target matches the KBW view. (See GBDC stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
(Reuters) – Norfolk Southern said late on Sunday it has opened an investigation into allegations of potential misconduct by Chief Executive Alan Shaw.
The company said that its audit committee is working with a law firm “to conduct an independent investigation of the allegations.”
CNBC had first reported, citing people familiar with the matter, that Shaw engaged in an inappropriate workplace relationship.
Shaw did not immediately respond to a request for comment on the investigation.
In May, activist investor Ancora won three board seats at the railroad operator but failed to oust the railway’s chief executive.
Ancora had proposed investors push Alan Shaw off the board and elect Jim Barber, a former chief operating officer at UPS, so that he could eventually replace Shaw as CEO. They also proposed Jamie Boychuk to become the chief operating officer.
Shaw was appointed as the CEO in May 2022, replacing Jim Squires.
The hedge fund argued new blood was needed to improve financial and operational metrics and said it would continue to hold the company accountable for any future railway accidents or underperformance.
The Atlanta, Georgia-based company reported operating revenue of $3 billion in the second quarter, up 2% from last year, narrowly missing analysts’ estimates of $3.04 billion.
(This story has been corrected to say that Shaw was appointed CEO in May 2022, not that he joined Norfolk Southern in May 2022, in paragraph 7)
(Reporting by Urvi Dugar and Rishabh Jaiswal; Editing by Diane Craft and Christopher Cushing)
The road ahead for struggling Intel (INTC) is uncertain at best as its stock hovers near record lows.
Intel faces an “uphill battle” to turn itself around and compete with the likes of Nvidia (NVDA), AMD (AMD), and Taiwan Semiconductor (TSM), Goldman Sachs analyst Toshiya Hari told Yahoo Finance at the Goldman Sachs Communacopia & Technology Conference on Monday.
Hari rates shares of Intel as Sell. He thinks the company will need some time to get its technology —notably AI chips — on par with its better-performing rivals, if they can do it at all.
Goldman’s bearish take on Intel — while having Nvidia on its closely watched conviction buy list — comes at a precarious time for the company.
Intel widely missed second quarter analyst estimates on sales, gross profit margin, and earnings as it encountered more challenging market conditions and higher-than-expected costs to ramp AI chip production.
The company took the drastic action of suspending its dividend, which will go into effect in the fourth quarter. Intel has paid a dividend for 125 straight quarters previously, including $3.1 billion in 2023.
Intel said it would slash 15% of its workforce to get costs under wraps.
“This is the biggest restructuring of Intel I’d say since the memory microprocessor decision four decades ago,” Intel CEO Pat Gelsinger told Yahoo Finance following the results in early August.
Gelsinger says he’s in it for the long haul despite being disappointed in the quarter and outlook.
“This is what I signed up for [when I came in as CEO],” Gelsinger added.
Gelsinger is reportedly exploring an IPO of Intel’s chipmaking business Altera and a possible sale of its foundry business to shore up investor confidence.
Intel’s stock is down by about 50% in the past year. By comparison, shares of Nvidia and AMD are up 132% and 30%, respectively.
“From a company fundamental perspective, the company is facing tough macro headwinds and a highly competitive compute environment exacerbated by lingering questions on its ability to execute on its technology/product/diversification road maps,” JPMorgan analyst Harlan Sur said in a recent client note.
Sur — who rates Intel’s stock at Underweight (Sell equivalent) — added, “Given the market has time to gain confidence in Intel’s ability to execute in its core compute and diversification initiatives, we believe INTC will be an underperformer relative to the group over the next 12-18 months.”
Three times each week, I field insight-filled conversations with the biggest names in business and markets on Yahoo Finance’s Opening Bid podcast. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
In the Opening Bid episode below, EMJ Capital founder and veteran tech investor Eric Jackson makes the case for a doubling in Nvidia’s stock price.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
