Chip maker Intel (INTC) has had its share of bad news over the last few weeks, but no one, yet, has ever suggested it might bring down a technology with it. That changed today, as new reports note that problems for Intel are also problems for virtual radio access network (RAN) products. And that revelation sent Intel shares down over 1.5% in Wednesday afternoon’s trading.
Virtual radio access network products are software solutions that replace traditional mobile network hardware, making networks more efficient and easier to manage. RAN is the part of a mobile network that connects devices like smartphones to the core network.
As it turns out, Intel is a significant part of the virtual RAN market, according to a Light Reading report. In fact, it holds a 99% market share in all virtual RAN deployments. With Intel frantically cutting its workforce, that represents a major threat to the entire virtual RAN concept.
The workforce cuts are also part of a larger effort to save money and improve cash flow, likely to help support its ambitions as a chip foundry. But with Intel looking to cut spending down to between $20 billion and $23 billion next year, its spending on virtual RAN deployments is likely to fall as well.
Abandon Intel
As Intel continues to struggle, the common thread these days seems to be getting out of its stock. Indeed, hedge funds are getting out as well; at the end of the first quarter, Intel had 77 hedge fund investors. That dropped to 75 by the end of the second quarter.
And, to make matters worse, Intel has also come to the end of its voluntary downsizing program in Israel, in which it offered “…preferential conditions for eligible employees.” Now, it turns its attention to involuntary termination that will also include “reductions in various activities.” Intel will be actively doing less, a move that may not be helpful for cash flow in the future.
Is Intel a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. After a 42% loss in its share price over the past year, the average INTC price target of $27.32 per share implies 38.93% upside potential.
