When Third Point hedge fund manager Dan Loeb wrote a letter to Intel (NASDAQ:INTC) urging it to restructure, it validated AMD’s (NASDAQ:AMD) turnaround win against the giant in the last decade. In that time, Intel lost its way. It spent billions on acquiring businesses that did not pivot the company to grow.
Investors should welcome a shake-up and restructuring at Intel. Earlier in the last decade, Intel bought MacAfee anti-virus software, only to sell 51% of it to private-equity firm TPG for $4.2 billion five years later. MacAfee returned to the stock market as a public company recently.
Intel bought Mobileye. Now that SPACs doing business with Mobileye, stocks like Luminar Technologies Inc (NASDAQ:LAZR) are flying high. Yet markets are not lifting Intel’s valuation.
The 2015 acquisition of Altera for $16.7 billion did not increase shareholder returns. Instead, Intel stock trended lower in the last six years as it lost market share to AMD. AMD recently acquired Xilinx, paying all-stock in the transaction. AMD becomes a mighty competitor against Intel in
the custom circuit segment.
Intel is still a turnaround play in the PC CPU space for now. Time is running out. It can only squeeze out slightly more performance in the current node. From there, it cannot afford any more delays in migrating to the next generation of computer chips.
