/Intel%20Corp_%20Santa%20Clara%20campus-by%20jejim%20via%20Shutterstock.jpg)
Intel (INTC) is a semiconductor manufacturing company that specializes in designing and developing microprocessors, microcontrollers, chipsets, and embedded processors. The company also offers services for 5G connectivity, cloud computing, data center solutions, artificial intelligence, and more.
Intel Offloads Altera
Intel, under its new CEO Lip-Bu Tan, is making strategic moves to monetize nonessential assets by selling a 51% stake in its Altera business to private equity group Silver Lake. Altera specializes in field programmable gate arrays (FPGAs), but its revenue has declined since Intel acquired it in 2015 for $16.7 billion. The sale values Altera at $8.75 billion, marking a loss in value for Intel. Intel will retain a 49% minority stake to benefit from Altera’s potential recovery.
Intel plans to maintain a partnership with Altera, leveraging its foundry business. Despite Altera’s operating loss of $615 million in 2024, its FPGA market is considered promising for growth. This sale reflects Tan’s quick action to revamp Intel, with more updates expected during the earnings call on April 24.
Intel will also deconsolidate Altera’s financial results from its own. In 2024, the FPGA company generated $1.5 billion in revenue but reported a loss of $615 million. Altera reported revenue of $1.9 billion back in 2014 before being acquired by Intel.
As a result of the move, Altera’s CEO Sandra Rivera will be stepping down with Raghib Hussain taking command. Hussain most recently served as the president of product and technologies at Marvell Technologies (MRVL).
Intel Beats Estimates with Soft Guidance
Intel posted its fourth-quarter results on Jan. 30, reporting a loss of $126 million or $0.13 per share on an adjusted basis. The result just edged past expert’s $0.12 per share estimates. The semiconductor giant reported revenue of $14.26 billion, also topping analysts’ $13.78 billion estimate.
During the quarter the company had an operating margin of 2.9%, down from 16.8%, reflecting its profitability struggles. Intel’s gross margin dipped to 39.2% from 45.7% due to the strategic shift in the core business and restructuring costs.
Intel expects revenue of $12.2 billion at the midpoint for the ongoing first quarter of 2025 and break-even adjusted EPS. Analysts were anticipating $12.9 billion with earnings per share of $0.09. The company is set to release its first-quarter results on April 24, 2025.
Analysts’ Reaction to the Altera Move
Analysts view the move to ditch Altera as part of a larger effort to reshape Intel under Tan’s leadership. Rosenblatt Securities analyst Kevin Cassidy has a “Sell” rating on the stock and expects more information on the deal next week when the company posts its quarterly results.
On the other hand, Stifel research analyst Ruben Roy suggested that despite taking a loss in the deal, Intel stands to benefit in the long term. The analyst reasoned that since Altera is a field programmable gate array (FPGA) company, it is set to grow but is not the game changer to Intel’s fortunes. He labels Intel’s move to hold onto a minority share in the company as a means to provide financial backing while reaping the rewards over time.
Roy has a “Hold” rating on the stock with a $21 price target, which reflects upside potential of roughly 10%.
The stock has a consensus “Hold” rating from Wall Street with a mean price target of $24.62, reflecting upside of 30%. Intel has been reviewed by 36 analysts in total, out of which only one analyst has given it a “Strong Buy” rating, while 31 analysts have a “Hold” rating, and four have a “Strong Sell” rating on the stock.
