Key Points:

• Intel is considering breaking up amid struggles and declining market position.
• Morgan Stanley has been hired to protect against activist investors, with rumors of Qualcomm interest.
• Investors face uncertainty as Intel’s future direction remains unclear.
• As good as Costco is, it’s not as good as “the Next Nvidia”. Click here now to see what the hype is all about.

Doug and Lee discuss the current struggles of Intel (NASDAQ: INTC), once the dominant player in the chip industry but now facing significant challenges. They highlight Intel’s decline, including layoffs, potential asset sales, and the possibility of being removed from the Dow Jones Industrial Average. They also touch on rumors of Qualcomm’s (NASDAQ: QCOM) interest in acquiring parts of Intel and speculate on whether breaking up the company might unlock more value for investors. They conclude by noting that while Intel’s stock might see a temporary boost from these rumors, the company’s future remains uncertain and potentially perilous.

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Edited Video Transcript:

So Intel, uh, ten years, twenty years, thirty years ago, king of all chips, because every PC had one, like AMD was a distant second.

If you had an AMD PC, people disrespected you.

It was in a gateway.

Yes, they spit on your shoes.

But fast forward to today, they are from hunger.

They’re just, they’re dead.

You’ve got Chip King as NVIDIA, you know, gone to the trillion dollar market cap.

AMD, once again, a distant second.

But in this case, it’s…

But they’re at least in the game.

They’re at least in the game.

Intel is in such bad shape now that the CEO is talking to the board about breaking it into pieces.

But that’s not the latest.

So why don’t you fill us in?

Well, I mean, it was reported… the last couple of days that Morgan Stanley was hired to kind of go in and protect Intel from activist investors, and I suspect one of those activists is still Dan Loeb at Third Point.

You know, he’s a genius, one of the best hedge fund managers there is.

I think it was in, you know, took took a sizable position figuring, okay, perhaps the sum of the parts is worth more than it’s trading at, and it’s been a downhill spiral ever since.

And they have all sorts of problems.

And one of the biggest questions is what are they going to have to sell off?

You know, they bought Altera, which is a programmable chip company that they thought that they could work in.

That doesn’t seem to be working out.

They spun off Mobileye, but they still have a bunch of that, and they may have to sell that.

So it kind of boils down to something like what are they going to do?

And it could be drastic.

And I had one thing hit me swear in the face the other day, they’re in the Dow Jones Industrial Average.

You think they get booted?

Yeah.

Now, but we’ve got a new player as of today, right?

There’s a rumor that Qualcomm, isn’t there a rumor that Qualcomm wants a piece of this?

I have seen that today, and I only saw a headline, so I didn’t, I wasn’t going to throw it out, but yeah, I did see that headline.

And I guess that could make sense.

I mean, yeah, Qualcomm doesn’t really make the kind of computer-ready core chips that go into PCs and laptops.

So perhaps it could be.

Yeah.

Well, look, I think there’ll be a lot of people who want to come in and cherry pick, you know, pieces of this because they think that they are worth more than Intel.

You know, if you just took this thing and divided it by five.

But this is a very good example.

And we’ve seen this in corporations before a lot.

Company gets into trouble and they start to take it and say, well, maybe we can sell it off in pieces and it will be worth more to investors.

So I think that if you’re an investor, you’ve got to make a decision fairly quickly if you’re interested in Intel.

And that is, if Intel’s not going to sell anything, it was going to stay the same.

No change from right now.

I think it’s dead meat.

You could buy it.

Maybe it goes up five percent.

Maybe.

Oh, absolutely.

But it may be that it is one of these sum of the parts things.

I mean, you see it at other successful companies that are successful, like Amazon.

A lot of people will say to you, well, AWS is worth almost as much as all of Amazon.

So it could be there’s some pieces of Intel.

If Intel gets cash for those, people could start to look at Intel and start to look at it as a piggy bank.

Yeah.

Another thing that’s been interesting, Doug, is they’re against the wall as it is.

They’ve laid off fifteen thousand people, which is about fifteen percent of their total workforce.

You know, they were they were making noise about this huge fab plant that they were going to build in Ohio.

And I think they’ve had to tap the brakes on that.

And, you know, I think companies like not only them, but, you know, Texas Instruments, there’s a lot of heat coming on this government chips bill where, you know, the government’s throwing out money to chip companies to get them to stay in the United States.

And, you know, the government has to once again be the backer of all this.

What about private industry?

What about private equity?

What about Wall Street?

Why does the government have to be involved in it?

Yeah.

I have no idea.

But we’ll probably come back to this soon because if there’s a sale of a lot of stuff, it’s not going to be ten years from now.

No.

You’ve got no.

And Altera would bring a fair amount of money back into the game, and I guess whatever they still hold of Mobileye would as well.

But time’s running out on these guys because…

Yeah, and there’s been some chatter about that they’d restart the foundry business and all that.

And I’m just like, that ain’t going to start happening and helping tomorrow or next quarter or even next year maybe.

So, yeah, I mean, they could be dead man walking.

And again, if this keeps up, they’ll get booted from the Dow.

Yeah.

Well, listen, keep an eye on this stock.

It’s one of the stocks where people could get their hopes up because of this – rumors they got investment bankers in there and stuff.

And you know the stock may take a pop if so getting in before that and then selling it as it goes up because it’s probably going to be a disaster may not be a bad idea.

But I think to invest in it today if you believe that nothing’s going to happen is very dangerous.

Agreed.

Good.

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