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On Monday, Rosenblatt Securities addressed circulating rumors about Qualcomm's (NASDAQ:QCOM) potential acquisition of Intel (NASDAQ:INTC), suggesting that the speculation might be overstated. According to the firm, Qualcomm's interest likely centers on specific Intel technologies rather than a complete takeover of the company. The firm also expressed doubts about the deal's approval by government regulators, citing Qualcomm's decision not to switch foundry providers and the lack of a compelling reason to acquire Intel's foundry services.
Qualcomm has been making inroads into the notebook PC market with its Arm-based Snapdragon X Elite family of CPUs. Rosenblatt argued that acquiring Intel's x86 PC CPU family would only serve to confuse Qualcomm's customers and investors. The firm also noted that while there could be segments of Intel's client business that are of interest to Qualcomm, particularly in network and software capabilities, the Xeon family is unlikely to be sold separately.
The firm further mentioned that Intel may have valuable assets in its automotive and RF market attempts, which could be of interest to Qualcomm. These technologies and engineers might align with Qualcomm's potential strategy to enter the server market. However, Rosenblatt made it clear that a complete acquisition scenario seems implausible.
Qualcomm has an investor day planned for November 18, where management is expected to possibly shed light on strategies for acquiring select Intel technologies. Market participants and investors are likely to look for cues from this event regarding Qualcomm's future plans and its interest in Intel's offerings.
In other recent news, significant developments are unfolding in the semiconductor industry. It has been reported that Apollo Global Management (NYSE:APO), a U.S.-based asset management firm, is considering a substantial investment in Intel, potentially up to $5 billion. These negotiations are in progress, with no definitive agreement reached yet.
At the same time, Qualcomm has initiated conversations with Intel about a possible acquisition. Baird, however, has expressed skepticism about this potential merger, citing compatibility issues between Qualcomm's focus on ARM-based architectures and Intel's x86 dominance and fabrication capabilities. Baird maintains a neutral stance on Intel, along with Mizuho, Roth/MKM, and TD Cowen, while Exane BNP Paribas (OTC:BNPQY) holds an underperform rating and KeyBanc Capital Markets continues with a Sector Weight rating.
Despite these potential changes, Intel has confirmed its commitment to retaining its majority stake in Mobileye, an autonomous driving technology company.
InvestingPro Insights
As investors and market watchers speculate on Qualcomm's potential interest in Intel's assets, it's insightful to look at Intel's current financial health and market performance. According to real-time data from InvestingPro, Intel has a market capitalization of $93.39 billion, which reflects its standing as a prominent player in the semiconductor industry. Despite a challenging market environment, Intel has managed to maintain dividend payments for 33 consecutive years, highlighting its commitment to shareholder returns. However, it's worth noting that Intel's stock has experienced significant price declines over the last three and six months, with a 29.31% drop in the past quarter and a 48.16% fall over the last half-year period.
On the valuation front, Intel's price-to-earnings (P/E) ratio stands at 92.96, which might seem high compared to its near-term earnings growth potential. This is reflected in the adjusted P/E ratio for the last twelve months as of Q2 2024, which is at 48.5. The company's PEG ratio during the same period is 0.48, suggesting that its stock might be trading at a discount relative to its earnings growth. Additionally, Intel's revenue growth has been modest at 1.99% over the last twelve months as of Q2 2024, indicating stability in its financial performance.
For those considering Intel's stock, there are additional InvestingPro Tips available. These tips delve deeper into the company's financial metrics and industry position, providing a comprehensive analysis for investors. With 12 more tips listed on InvestingPro, interested parties can gain a nuanced understanding of Intel's investment potential by visiting the dedicated page for Intel at https://www.investing.com/pro/INTC.
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