Can Intel Stop an Aggressive Takeover?

By Douglas A. McIntyre Published Aug 26, 7:10AM EDT

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Intel Corp. (NASDAQ: INTC | INTC Price Prediction) has hired a premier investment banker to prevent a takeover by activist investors.
The argument to replace management of the chip manufacturer is strong.
Also: Discover the next Nvidia.

Intel Corp. (NASDAQ: INTC) has hired a premier investment banker to prevent a takeover of the chip manufacturer. Given its horrible results, particularly against Advanced Micro Devices Inc. (NASDAQ: AMD) and Nvidia Corp. (NASDAQ: NVDA), it should come as no surprise.

A takeover could be good for shareholders who have watched Intel plunge. Management could be replaced with one with a more positive stockholder program.

CNBC reports: “The sources with knowledge of Morgan Stanley’s latest involvement asked not to be named due to confidentiality. Representatives for Intel and Morgan Stanley declined to comment.” This is a normal playbook. Sometimes banks try to load the board with members favorable to management. Others give management extra power over shareholdings to make a takeover much harder.

The Problem With Intel

What is Intel’s future?

No matter what course management takes, the argument to replace management is strong. Intel’s shares are down 58% this year, with much of that coming after poor earnings. Over the same time, Nvidia has risen 161%. It is about to announce earnings that are much higher or lower. The price of the other major AI chip company, AMD, is up 5%, compared to an 18% increase in the S&P 500.

Intel, a successful maker of PC and server chips, missed the AI revolution almost completely. In the most recent quarter, revenue fell 1% to $12.8 billion. Net income was a loss of $1.2 billion, compared to a gain of $1.5 billion in the same quarter the year before. Management made huge layoffs in an effort to cut itself to profits.

Intel thinks its future is in foundry services: “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation,” said Pat Gelsinger, Intel CEO, when quarterly numbers were released. That should not give investors comfort and is a door to activist investors.

Prediction: This Semiconductor Stock Will Be the Best Performer for the Rest of 2024

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.