EU and US could reach trade deal this weekend - Reuters
On Monday, Intel Corporation (NASDAQ:INTC) maintained its Hold rating at Needham following the announcement of a significant transaction involving its subsidiary, Altera. Intel, currently valued at $89.5 billion in market cap and rated ’WEAK’ by InvestingPro’s Financial Health Score, has agreed to sell a majority stake of 51% in Altera to private equity firm Silver Lake for an enterprise value of $8.75 billion. The sale, which had been the subject of speculation for several months, is set to be finalized in the second half of 2025, with Intel keeping a 49% minority stake.
The transaction’s enterprise value is considered lower than expected, especially when benchmarked against Intel’s FPGA industry peer, Lattice (OTC:LTTC) Semiconductor, which commands almost twice the EV/Sales ratio. Furthermore, there were prior rumors suggesting that Altera could be valued at up to $17 billion. This comes as Intel faces significant challenges, with InvestingPro data showing negative free cash flow and a -2.1% revenue decline in the last twelve months. Get access to 6 more exclusive ProTips and comprehensive analysis in the Pro Research Report.
As a consequence of the deal, Intel’s current CEO Sandra Rivera is slated to resign from her position. Raghib Hussain, an experienced technology executive, will assume the CEO role starting May 5, 2025. The leadership change is aligned with the strategic shift prompted by the partial divestiture of Altera.
In light of the sale, Needham has announced that it will exclude Altera’s projected revenues of $1.66 billion for calendar year 2025 and $1.85 billion for calendar year 2026 from its financial model for Intel. This exclusion reflects the partial loss of Altera’s future contributions to Intel’s overall financial performance following the completion of the deal.
In other recent news, Intel Corporation announced the sale of a 51% stake in its Altera business to private equity firm Silver Lake, valuing Altera at $8.75 billion. This move is part of Intel’s strategy to focus on its core operations and improve its financial position. Altera, which specializes in FPGA technology, reported revenues of $1.54 billion for 2024, with a non-GAAP gross margin of 49.9% and a non-GAAP operating margin of 0.23%. Intel plans to deconsolidate Altera’s financial results from its statements upon completion of the transaction in the second half of 2025.
Stifel analysts maintained a Hold rating on Intel with a price target of $21, viewing the Altera sale as a positive strategic realignment. Meanwhile, Baird reaffirmed a Neutral rating with a $20 target, noting the potential for Altera to regain market share in high-end FPGA applications. Additionally, Intel faces challenges from China’s recent tariff developments, which may impact U.S.-based fabrication plants like Intel’s, as their products could be classified as U.S. origin and subject to higher tariffs.
These developments come amid broader geopolitical tensions affecting the semiconductor industry, with U.S. companies navigating complex supply chains and regulatory environments. As Intel continues to adjust its business strategy, investors are closely watching the company’s moves and their potential impact on financial performance.
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