Intel (INTC) to Spin-Off its Venture Capital Arm

Struggling chipmaker Intel (INTC) is spinning off its venture capital arm called “Intel Capital” as it continues to restructure its operations.

Specifically, Intel plans to spin-off its venture capital unit into a standalone fund will allow it to raise money from outside investors. Intel Capital currently has $5 billion of assets under management. Until now, the venture capital arm had been funded solely by Intel.

Intel is restructuring amid an ongoing decline in its finances and share price. In fact, Intel is coming off its worst year on the stock market since the company went public back in 1971. INTC stock has declined nearly 60% in the last 12 months, making it one of the worst performing securities in the benchmark S&P 500 index.

Righting the Ship

Intel has struggled with a costly move to not only design microchips and processors but also manufacture them through a new foundry business. Compounding financial losses have pushed the company to restructure and find ways to cut costs. In recent months, Intel has sold or wound down smaller divisions and laid off employees.

This past December, Intel parted ways with CEO Pat Gelsinger after four difficult years. Gelsinger has been replaced by two interim co-CEOs, David Zinzner and Michelle Holthaus. Regarding Intel Capital, the company said it plans to make the venture arm fully independent in the second half of this year.

Intel Capital was established in 1991 and was unique at the time as a venture arm of a large corporation. Since then, the model has been replicated across Silicon Valley by other technology companies such as Alphabet (GOOGL) and Microsoft (MSFT).

Is INTC Stock a Buy?

The stock of Intel has a consensus Hold rating among 27 Wall Street analysts. That rating is based on one Buy, 21 Hold, and five Sell recommendations made in the last three months. The average INTC price target of $24.48 implies 27.50% upside from current levels.

Read more analyst ratings on INTC stock