Intel Eyes Mobileye Share Sale Amid Financial Turmoil and Plummeting Stock Prices
Friday, Sep 6, 2024 3:00 pm ET
2min read Intel Corporation is contemplating the divestiture of its shares in Mobileye Global Inc., as part of a major strategic overhaul, according to insider sources. Mobileye, established in 1999 and headquartered in Jerusalem, specializes in autonomous driving systems. The company went public in the U.S. in 2022, and Intel sold a portion of its stake last year, netting approximately $1.5 billion in the process.
Intel currently holds an 88% stake in Mobileye. If Intel opts to sell more of its shares to raise capital, it enters a challenging period owing to Mobileye's plummeting stock price. This year, Mobileye's stock has nosedived by about 71%, reducing its market capitalization to roughly $10.2 billion. The company is on track for its third consecutive annual loss.
Mobileye has been adversely affected by post-pandemic supply surpluses in the automotive industry, prompting car manufacturers to cut back production. Last month, Mobileye revised its revenue projections downward and significantly lowered its adjusted operating income forecast, missing analysts' expectations.
Intel has been grappling with one of the most challenging periods in its 56-year history and has been in extensive talks with advisors on how to boost performance. These discussions include considering options for its Network and Edge business, which manufactures chips for computer and telecommunications networks. Last year, this business unit saw a revenue decline of nearly one-third, amounting to around $5.8 billion. Inside sources have emphasized that no final decisions have been made regarding either Mobileye or the Network and Edge division.
Intel's CEO Pat Gelsinger is spearheading an ambitious plan to regain the company's supremacy in the semiconductor industry by constructing new factories and rapidly advancing its manufacturing technology. However, Intel posted a net loss of $1.61 billion last quarter, and analysts forecast further losses in the upcoming year, intensifying pressure on Gelsinger to turn the situation around. Various strategic options will likely be presented at the company's board meeting later this month.
The potential sale of Mobileye shares could inject much-needed cash into Intel, but it comes at a low price, raising concerns of "selling at a loss." For Mobileye, further stock divestiture by Intel could exacerbate an already difficult situation, especially amidst slowing demand for electric vehicles in Western markets. A cooling EV market has posed challenges even for industry leaders like Tesla, thus adding to the difficulties faced by Mobileye.
Intel's representative reiterated in an email statement that the company remains focused on creating shareholder value, executing plans to accelerate profit growth, and building a more streamlined, flexible future for the firm. Mobileye's spokesperson declined to comment.
In conclusion, while Intel aims to navigate through its current financial turbulence by offloading a portion of its Mobileye shares, the move could lead to more significant challenges for both entities. The broader autonomous driving sector might also feel the ripple effects, signaling a tougher road ahead.
Intel currently holds an 88% stake in Mobileye. If Intel opts to sell more of its shares to raise capital, it enters a challenging period owing to Mobileye's plummeting stock price. This year, Mobileye's stock has nosedived by about 71%, reducing its market capitalization to roughly $10.2 billion. The company is on track for its third consecutive annual loss.
Mobileye has been adversely affected by post-pandemic supply surpluses in the automotive industry, prompting car manufacturers to cut back production. Last month, Mobileye revised its revenue projections downward and significantly lowered its adjusted operating income forecast, missing analysts' expectations.
Intel has been grappling with one of the most challenging periods in its 56-year history and has been in extensive talks with advisors on how to boost performance. These discussions include considering options for its Network and Edge business, which manufactures chips for computer and telecommunications networks. Last year, this business unit saw a revenue decline of nearly one-third, amounting to around $5.8 billion. Inside sources have emphasized that no final decisions have been made regarding either Mobileye or the Network and Edge division.
Intel's CEO Pat Gelsinger is spearheading an ambitious plan to regain the company's supremacy in the semiconductor industry by constructing new factories and rapidly advancing its manufacturing technology. However, Intel posted a net loss of $1.61 billion last quarter, and analysts forecast further losses in the upcoming year, intensifying pressure on Gelsinger to turn the situation around. Various strategic options will likely be presented at the company's board meeting later this month.
The potential sale of Mobileye shares could inject much-needed cash into Intel, but it comes at a low price, raising concerns of "selling at a loss." For Mobileye, further stock divestiture by Intel could exacerbate an already difficult situation, especially amidst slowing demand for electric vehicles in Western markets. A cooling EV market has posed challenges even for industry leaders like Tesla, thus adding to the difficulties faced by Mobileye.
Intel's representative reiterated in an email statement that the company remains focused on creating shareholder value, executing plans to accelerate profit growth, and building a more streamlined, flexible future for the firm. Mobileye's spokesperson declined to comment.
In conclusion, while Intel aims to navigate through its current financial turbulence by offloading a portion of its Mobileye shares, the move could lead to more significant challenges for both entities. The broader autonomous driving sector might also feel the ripple effects, signaling a tougher road ahead.
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