Management has hired bankers to explore options for the troubled chipmaker.
Intel (INTC 9.49%) has been moving in the wrong direction so far in 2024, with the stock losing more than half its value year to date.
Management is reportedly open to radical steps to reverse the decline, and investors are taking notice. Shares of Intel were up 8% as of 10:30 a.m. ET on news that the company has hired bankers to assess options to kick-start growth.
Is a breakup in the cards?
It’s been a tough few years for Intel. The once-storied semiconductor maker has lost ground to Nvidia and others, leading to a series of restructuring efforts that so far have not had the desired impact.
On Friday, Bloomberg reported that Intel has hired advisors including Morgan Stanley and Goldman Sachs to formulate options. The company is said to be considering various scenarios, including splitting its product design and manufacturing businesses, as well as scrapping certain factory projects.
The report said that no big move is imminent, and that discussions are in their early stages. Management intends to present different options to the board during a regularly scheduled September meeting.
Is Intel stock a buy?
Intel definitely needs to take a hard look at its operations, but investors hoping for radical change are likely to be disappointed. The report says the company is likely to initially focus not on divestitures and breakups, but rather on holding off on expansion plans to conserve cash.
It is good that CEO Pat Gelsinger and the rest of the management team realize that the status quo is unsustainable. But until there is a clear plan for how to proceed from here investors should remain cautious about buying into Intel.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Nvidia. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
