BofA says challenges ‘overwhelm’ potential benefits of Intel buyout

BofA analysts says a possible Qualcomm (QCOM) takeover of Intel (INTC) is “intriguing but perhaps impractical.” The scale benefits are outweighed by regulatory and financial hurdles, the analysts tell investors in a research note. The firm says that if such a deal were to be contemplated, potential pros would include greater scale with $90B in pro-forma sales, leadership across mobile, PC and server central processing units, and opportunity to utilize Intel’s large fab footprint. However, the “challenges overwhelm the potential benefits” with a tough regulatory environment, specifically in China and Intel’s “weak financials” with large cash burn including $53B in debt and large capex intensity required to support its extensive fab network. BofA is “skeptical of the merits of any proposed transaction” and believes any announcement could create confusion given potential for headcount and roadmap disruptions and be a relative positive for Intel’s rivals like AMD (AMD), Nvidia (NVDA), Broadcom (AVGO) and Arm (ARM). The firm keeps an Underperform rating on Intel and Buy rating on Qualcomm.