Intel CEO Pat Gelsinger To Present Board With Major Asset Sale And Cost-Cutting Plan, Including Halting $32B German Project: Report
In a significant move aimed at revitalizing the company, Intel Corp. (NASDAQ:INTC) CEO Pat Gelsinger is set to present a comprehensive plan to the board, focusing on asset sales and cost reductions.
What Happened: Intel’s CEO and other executives will present a plan to the board to shed assets and cut costs, Reuters reported on Monday, citing a source familiar with the matter.
Gelsinger will present the proposal at a mid-September board meeting. The plan aims to sell off businesses, including the programmable chip unit Altera, to reduce overall costs. Intel has enlisted Morgan Stanley and Goldman Sachs to advise on these asset sales. The company has not yet solicited bids but will likely do so after board approval, according to the report.
The proposal may also include halting the $32 billion German factory project, Reuters noted. Intel’s capital spending cuts are part of a broader effort to revive the struggling chipmaker.
Intel has already separated its foundry business from its design business, reporting financials separately since the first quarter of this year. This move aims to protect customer technology secrets.
Intel is facing significant challenges, including a weak second-quarter earnings report and a declining market capitalization, now below $100 billion.
Intel did not immediately respond to Benzinga's request for comment.
Why It Matters: Intel’s recent struggles have been multifaceted. In late August, Intel reported weak second-quarter earnings, with earnings per share falling significantly short of analyst expectations. This financial underperformance has added pressure on the company to make drastic changes.
Intel expects to reduce headcount by greater than 15% with the majority completed by the end of 2024.
Additionally, board member Lip-Bu Tan reportedly resigned following disagreements with Gelsinger and other directors over the company’s strategic direction.
Gelsinger has acknowledged market skepticism, especially as competitors like NVIDIA Corp. (NASDAQ:NVDA) have seen substantial gains. In a recent fireside chat, Gelsinger stated, “We respect some of the skepticism we’ve received from the market. We believe we’re up for the challenge.”
Price Action: Intel’s stock closed at $22.04 on Friday, up 9.49% for the day. In after-hours trading, the stock slightly dipped 0.16%. Year to date, Intel’s stock has seen a significant decline, dropping by 53.89%, according to data from Benzing Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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