Intel Corp. INTC has sold its stake in Arm Holdings ARM, a British chip firm, as part of its ongoing restructuring strategy.
What Happened: Intel, which is currently undergoing a major restructuring, has offloaded its 1.18 million share stake in Arm Holdings, as per a regulatory filing on Tuesday. The sale is estimated to have brought in around $146.7 million, based on the average stock price of Arm between April and June.
“This looks to be consistent with the restructuring plan and the renewed focus on liquidity and efficiency that [CEO Pat] Gelsinger laid out from the last conference call,” Benchmark Co analyst Cody Acree told Reuters.
Intel recently announced a workforce reduction of over 15% and the suspension of its dividend, citing a decline in traditional data center semiconductor spending and a shift towards AI chips.
Intel’s restructuring is part of an effort to regain its technological edge, particularly against competitors like NVIDIA Corp. NVDA and Taiwan Semiconductor TSM.
Despite the ongoing restructuring, Intel’s stock has been struggling, losing over 59% of its value this year. The company’s shares dropped by 26% on Aug. 2, following the dividend suspension.
Why It Matters: Intel’s decision to sell its stake in Arm Holdings comes amid a series of strategic moves aimed at revitalizing the company. Earlier this month, Intel postponed its annual “Innovation” event, initially planned for September, due to financial challenges and a CPU bug controversy. The event is now rescheduled for 2025.
Additionally, Intel has announced plans to cut 15% of its workforce, or about 15,000 jobs, despite receiving $8.5 billion in government grants from the CHIPS and Science Act. This act, signed into law in August 2022, allocated $280 billion for science and technology research, with $52.7 billion earmarked for semiconductor development.
Despite these challenges, some analysts see the potential for a 36% upside, suggesting that the current downturn might present a unique buying opportunity.
Price Action: Intel Corp’s stock closed at $20.47 on Tuesday, marking a significant gain of 5.73% for the day. In after-hours trading, the stock dipped slightly by 0.34%. Year to date, Intel’s shares have experienced a substantial decline of 57.18%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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