The completion of a big deal between chip stock Intel (INTC) and SK hynix did little good for Intel; despite losing some intellectual property and employees, and gaining a nice slug of cash, investors did not find this a good move. They registered their dissatisfaction in sufficient fashion to send shares plunging over 4% in Friday afternoon’s trading.
Back in 2020, Intel made a move to sell off its NAND flash memory operations, which were purchased by SK hynix, one of the biggest names in flash memory around. SK bought that property for $8.85 billion, and made the final payment of $1.9 billion, which Intel received sometime yesterday. With the last payment, SK hynix now has full room to work with the Solidigm teams, which were formerly Intel employees, reports noted, and help develop that product line out for SK.
Interestingly, the $1.9 billion SK paid was actually lower than it was supposed to be; the final payment was supposed to be for $2.24 billion. Why the discrepancy occurred is unclear, but it is a safe bet that Intel is glad for any extra cash it receives. Indeed, an Intel rep noted that the move would “…further strengthen Intel’s balance sheet and enhance its financial flexibility.”
Gelsinger Talks Resignation
Then, in a bit of a surprise to cap off the week of news for Intel, former CEO Pat Gelsinger actually came out to talk about the resignation from Intel that, apparently, was not a hundred percent voluntary. Gelsinger revealed that he had a complete five-year plan for Intel’s turnaround, but this did not sit well with the board, who cut short the plan roughly at the halfway mark.
Gelsinger was ultimately given a terrible choice: leave voluntarily or face removal. And so, Gelsinger decided to walk out on his own terms. Now, Gelsinger’s replacement, Lip-Bu Tan, is planning his own turnaround, but one that will likely be a lot more drastic, which Intel’s board seems to approve of more than the five-plus year affair that Gelsinger brought with him.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 27 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 48.51% loss in its share price over the past year, the average INTC price target of $23 per share implies 1.08% upside potential.
