Intel stock jumped Friday on a report that the chip giant is considering major changes, including spinning off or selling its manufacturing business.
Intel is in talks with investment bankers to explore different options for the semiconductor behemoth, Bloomberg reported, citing unnamed sources. The company is also considering scrapping factory projects and M&A deals, the report said. Intel is expected to present the options at a board meeting in September, the report said.
Intel stock rallied 9.5% to close at 22.04, helping lift the Dow Industrial Average. The Santa Clara, Calif.-based company has struggled recently against faster-growing rivals led by Nvidia and AMD. Intel also has lagged rivals in the hottest trend now sweeping the tech industry, artificial intelligence.
Intel badly missed Wall Street estimates when it reported earnings earlier this month. The results led Intel to announce a $10-billion cost reduction plan and to suspend its quarterly dividend.
Intel Stock: Challenging Quarterly Results
The company also posted a downbeat outlook. "If Q2 results were challenged, Q3 outlook was awful (setting a new record for the worst we've ever seen the company put up)," Bernstein Research analyst Stacy Rasgon told clients in a note.
Spinning off or selling its manufacturing business would be a major shift in Intel's business. For decades, Intel dominated the chip industry with its state-of-the-art manufacturing technology. But the company has lost its dominant position in semiconductor manufacturing in the last few years.
Intel shares have shed more than 50% this year. The stock has a dismal Relative Strength rating of 6 out of a best-possible 99.
