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Intel to Sell Mobil Eye, Strategic Mistake?

Arthur Hanson

Well-known member
Intel must be having real problems to sell a division in a high growth area that would have a huge market beyond self driving if given careful thought. Mobil Eye is essentially about creating ways in which technological devices interact in the physical world in a safe manner. This technology could be vastly leveraged into many areas of interfacing technology safely in human interactions. Any thoughts or comments appreciated.
 

hist78

Well-known member
Intel needs to raise more cash urgently and there are few good (or less negative impact) options left to do so. Mobileye IPO is one of them.
 

blueone

Well-known member
Well, that $50B valuation is out the window. Intel is cutting the valuation to $30B, and applied for an IPO.

 

hist78

Well-known member
Well, that $50B valuation is out the window. Intel is cutting the valuation to $30B, and applied for an IPO.


@blueone

Do you think this new $30 billion valuation reasonable or still too high?
 

blueone

Well-known member
@blueone

Do you think this new $30 billion valuation reasonable or still too high?
I'm not a finance guy, but Mobileye's 2021 revenue was about $1.4B, and it has swung to profitability since 2019, with a 10% net profit last quarter. Revenue and profit growth last quarter were both over 40% year over year, though I have no idea how sustainable that is. The revenue comes from ADAS, and not self-driving per se, and I don't know how much of the valuation is due to the hope of self-driving. I think fully autonomous self-driving is like nuclear fusion, and it's always a long ways off, but that's not my field either.

To put Mobileye's valuation into perspective, Ford had annual revenue of $136B, annual profit of $23B, for the twelve months ending in June, and its current valuation is about $45B. GM's revenue for 2021 was $127B, and their net profit was $10B. (Yeah, Ford is bigger.) GM's market capitalization is just under $47B (as of this posting). So when I see these super-high valuations, even the $30B figure, no less the $50B objective, I get skeptical. I wouldn't invest at an IPO price with a valuation of $30B, but I'm not much of a speculator. Speculative investing is always a personal decision.
 

hist78

Well-known member
I'm not a finance guy, but Mobileye's 2021 revenue was about $1.4B, and it has swung to profitability since 2019, with a 10% net profit last quarter. Revenue and profit growth last quarter were both over 40% year over year, though I have no idea how sustainable that is. The revenue comes from ADAS, and not self-driving per se, and I don't know how much of the valuation is due to the hope of self-driving. I think fully autonomous self-driving is like nuclear fusion, and it's always a long ways off, but that's not my field either.

To put Mobileye's valuation into perspective, Ford had annual revenue of $136B, annual profit of $23B, for the twelve months ending in June, and its current valuation is about $45B. GM's revenue for 2021 was $127B, and their net profit was $10B. (Yeah, Ford is bigger.) GM's market capitalization is just under $47B (as of this posting). So when I see these super-high valuations, even the $30B figure, no less the $50B objective, I get skeptical. I wouldn't invest at an IPO price with a valuation of $30B, but I'm not much of a speculator. Speculative investing is always a personal decision.

In the self driving or smart car market, there are other strong contenders such as Qualcomm, Nvidia, Tesla, Google/Waymo, Apple, Cruise/GM and some Chinese companies. There are no dominant player yet. This factor will be considered heavily by the investors.
 

count

Well-known member
I think $30b valuation is high in the current market. My guess is $20b is probably reasonable. Considering Intel paid about $15b in 2017, it's not looking like the blockbuster payoff the company thought it would be, and it's not likely going to be enough to plug the major capital hole that Intel is facing.
 

nghanayem

Active member
I think $30b valuation is high in the current market. My guess is $20b is probably reasonable. Considering Intel paid about $15b in 2017, it's not looking like the blockbuster payoff the company thought it would be, and it's not likely going to be enough to plug the major capital hole that Intel is facing.
I think intel still sees a lot of value there given they are only selling off a minority stake of the company. If they didn't think their investment would pan out or that this is "as good as it gets", then you would think they would sell off most of their stake in the company.
 

blueone

Well-known member
I think intel still sees a lot of value there given they are only selling off a minority stake of the company. If they didn't think their investment would pan out or that this is "as good as it gets", then you would think they would sell off most of their stake in the company.
Intel has never been especially competent with investments. Assuming for 2022 Mobileye revenue is about $2B, a $30B valuation is 15x revenue. Still seems very rich for a chip company.
 

nghanayem

Active member
Intel has never been especially competent with investments. Assuming for 2022 Mobileye revenue is about $2B, a $30B valuation is 15x revenue. Still seems very rich for a chip company.
Hence why I said "Intel sees value". If they thought it was a losing battle they probably would have cut and run. On a more positive note I think this is one of their more shrewd investments, some of their autonomous driving tech looks very promising (if for no other reason than it seems very cost effective). Heck if memory serves even Tesla is talking about moving to an all camera based system for their next iterations of "Autopilot". And while driver assist systems aren't sexy, they will form the backbone of any autonomous system and if memory serves mobil-eye has strong penetration with all of the major automakers.

Was this $15B (plus any extra funding ME got after being bought) investment profitable?
Probably.

Was this the "best" use of intel's cash?
I think it is too early to say (but at least so far probably not).

Was this better than most of intel's ventures?
Definitely.
 
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blueone

Well-known member
Was this better than most of intel's ventures?
Definitely.
On this point we can agree, but if you look at the rag-tag list of companies they've wasted money on - excuse me, acquired - over the years, I'm not thinking this is much of an accolade. Of course, it's not just Intel... the grand prize winner for over-paying is probably AMD buying for Xilinx for $35B. It makes Altera look like a bargain. At least it was an all-stock deal.
 

blueone

Well-known member

count

Well-known member
AMD bought Xilinx in stock. You could argue that AMDs stock price was elevated at the time, so they were trading one overpriced asset for another. I think the AMD-Xilinx acquisition was actually pretty good for AMD and will work out on a long time horizon.
 
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