Taking Intel Private?

[Daniel Nenni]

I was wondering if that is being considered for then next board meeting? What would it take? Is it even possible? Would it help Intel?

I googled around and found this article:

Going Private May Be the Best Option for Intel
Roughly a decade ago, Michael Dell had much the same problem. He needed to fix Dell and he knew that he couldn’t do it while Dell was public. So he took the company private, which gave him the time he needed to fix what had to be fixed, and then he creatively took the company public again so he could again access the investor pool of money and use shares and options for employee retention (which is often problematic for a private company).

To accomplish what Gelsinger needs to get done, he may need to take Intel private. Fortunately, he knows Michael Dell well, and I’m sure Dell would step up to help given that Dell is tied at the hip to Intel. Should Gelsinger be forced out, the result for Dell would not be good (the two CEOs get along well and I know Dell appreciates what Gelsinger is trying to do).

Gelsinger May Need To Take Intel Private to Execute on Strategy | Internet News

Gelsinger's vision for Intel is a good one, and if Wall Street won't give him the space to carry it out, Intel should go private.

www.internetnews.com

 

[XYang2023]

I think it is not fair to shareholders as they have invested in this journey. If shareholders would cast a vote, they would vote for stopping the fabs instead of going private.

I think for Intel, it needs to stop money wasting activities, focus on its products, and drive up its share price.

 

[XYang2023]

IT'S OFFICIAL: Dell Going Private At $13.65 A Share

www.businessinsider.com

The deal was valued at $24.4 billion.

The current Dell valuation is 80.28B.

 

[XYang2023]

It might make sense when PG first got the job without confusing investors about the risk/cost of his strategy.

“The Intel turnaround train is leaving the station, and I hope you all get on board. It’s an ambitious goal. But I am confident Intel’s best days are in front of us,” Gelsinger said in his presentation.

Intel Stock Sinks After Pat Gelsinger Details 4-Year Comeback Plan | CRN

Shareholders responded harshly to Intel's detailed comeback plan at the Intel Investor Day meeting, sending Intel's sock down as much as 6.4 percent Friday.

www.crn.com

 

[Daniel Nenni]

It might make sense when PG first got the job without confusing investors about the risk/cost of his strategy.
“The Intel turnaround train is leaving the station, and I hope you all get on board. It’s an ambitious goal. But I am confident Intel’s best days are in front of us,” Gelsinger said in his presentation.

Intel Stock Sinks After Pat Gelsinger Details 4-Year Comeback Plan | CRN

Shareholders responded harshly to Intel's detailed comeback plan at the Intel Investor Day meeting, sending Intel's sock down as much as 6.4 percent Friday.

www.crn.com

Well, the IDM 2.0 honeymoon is officially over. I have seen this with CEO changes in the past. You get 2-3 years to make it work. I never agreed with the 5 Nodes in 4 years strategy, that was doomed from the beginning. Ramping 5 nodes to HVM in four years? AMD is not in Intel's rearview mirror. Nvidia owns AI. Dozens of new chip companies are circling Intel like vultures picking at the carcass. Worst of all, the semiconductor industry is not as healthy as it seems.

Again, Intel can claim process supremacy all they want but unless their financials measure up someone is going to get fired. I think taking Intel private would give them more time but it would not solve the problems they face, if it is even possible.

Bottom line: The semiconductor industry moves very fast and Intel does not, my opinion.

 

[XYang2023]

Well, the IDM 2.0 honeymoon is officially over. I have seen this with CEO changes in the past. You get 2-3 years to make it work. I never agreed with the 5 Nodes in 4 years strategy, that was doomed from the beginning. Ramping 5 nodes to HVM in four years? AMD is not in Intel's rearview mirror. Nvidia owns AI. Dozens of new chip companies are circling Intel like vultures picking at the carcass. Worst of all, the semiconductor industry is not as healthy as it seems.

Again, Intel can claim process supremacy all they want but unless their financials measure up someone is going to get fired. I think taking Intel private would give them more time but it would not solve the problems they face, if it is even possible.

Bottom line: The semiconductor industry moves very fast and Intel does not, my opinion.

I agree with you. PG has a string of broken promises. The most serious one is missing the AI trend. If they had persisted with the AXG group, it might be different. A lot of money was wasted on various projects. Both PG and Koduri thought it was Nvidia and not AMD that was their number one threat. Instead, they spread their resources on many other things. They should just copy what Jensen is doing and not try to be clever.

I think changing to private does not solve the fundamental issue, which is that TSMC is leading the race. A better option for shareholders is for Intel to exit its foundry strategy as soon as possible.

Citi sees big boost for Intel's margins and profits if exiting foundry

Investing.com -- Citi analysts believe Intel (NASDAQ:INTC) could significantly improve its profitability by exiting the foundry business.

finance.yahoo.com

Citi’s analyst expects that if Intel exits its foundry strategy, its EPS would revert back to $3-4. Given that this is a likely scenario, investors would prefer to let PG step down and exit his strategy.

 

[tedc]

I think changing to private does not solve the fundamental issue, which is that TSMC is leading the race. A better option for shareholders is for Intel to exit its foundry strategy as soon as possible.

It does help if you believe that Intel's strategy just needs time to properly execute.

The advantage of going private is you're no longer beholden to quarterly earnings that don't show ongoing investments and shifts in strategy that have yet to materialize.

 

[XYang2023]

It does help if you believe that Intel's strategy just needs time to properly execute.

The advantage of going private is you're no longer beholden to quarterly earnings that don't show ongoing investments and shifts in strategy that have yet to materialize.

The issue is that there are diverging paths to choose from. From a shareholders' point of view, it does not make sense.

It might make sense that IFS can be a private company with unlimited backing from the US government. PG can be the CEO of that entity. Intel remains a public traded company.

 

[tooLongInEDA]

The issue is that there are diverging paths to choose from. From a shareholders' point of view, it does not make sense.

It might make sense that IFS can be a private company with unlimited backing from the US government. PG can be the CEO of that entity. Intel remains a public traded company.

Do we really think that the US government will be as keen to subsidise a private company as a public one ? It's one thing to underwite a public company and something else to do so for private equity. A much harder sell to the public in my opinion.

Note: I have to assume that Intel shareholders have had the opportunity to vote on the foundry strategy. Several times. At company AGMs. Clearly not enough of them voted against. Or bothered to vote.

 

[XYang2023]

Do we really think that the US government will be as keen to subsidise a private company as a public one ? It's one thing to underwite a public company and something else to do so for private equity. A much harder sell to the public in my opinion.

Note: I have to assume that Intel shareholders have had the opportunity to vote on the foundry strategy. Several times. At company AGMs. Clearly not enough of them voted against. Or bothered to vote.

There was never an agenda to vote regarding the foundry strategy. Writing a put option for a potential failure of TSMC supply should not be paid by the individual shareholders. It should be the responsibility of US government and also TSMC.

 

[tooLongInEDA]

S

There was never an agenda to vote regarding the foundry strategy. Writing a put option for a potential failure of TSMC supply should not be paid by the individual shareholders. It should be the responsibility of US government and also TSMC.

Shareholders can always vote to remove management if they aren't happy.

Shareholders also take the risk of owning companies. Capitalism 101. It is not government's job to bail them out.

If Intel is taken private, this is not automatically bad for the shareholders. Depends on the terms and price.

 

[XYang2023]

S

Shareholders can always vote to remove management if they aren't happy.

Shareholders also take the risk of owning companies. Capitalism 101. It is not government's job to bail them out.

If Intel is taken private, this is not automatically bad for the shareholders. Depends on the terms and price.

I am only evaluating from the current point as we can’t change the past.

I remember at one point, PG wanted to raise the compensation for the management, and it was voted down due to the poor share performance. I don’t remember there being any vote regarding strategy.

The US should consider raising tariffs to finance/incentivize domestic leading-edge production. Again, this put-option should be paid by the government and TSMC.

 

[BruceA]

Foundry as a private entity managed by government or other investors, would be fun to see the incompetence trying to manage technology. At least Intel has Pat equally incompetent and misguided but at least a designer a long time ago

 

[hist78]

I am only evaluating from the current point as we can’t change the past.

I remember at one point, PG wanted to raise the compensation for the management, and it was voted down due to the poor share performance. I don’t remember there being any vote regarding strategy.

The US should consider raising tariffs to finance/incentivize domestic leading-edge production. Again, this put-option should be paid by the government and TSMC.

Are you suggesting that the falling giant and former monopoly, Intel, should be protected and given more taxpayers' money while competing with both domestic and international rivals?

 

[hist78]

Foundry as a private entity managed by government or other investors, would be fun to see the incompetence trying to manage technology. At least Intel has Pat equally incompetent and misguided but at least a designer a long time ago

That partially explains why the U.S. government resisted calls to use Chips Act funds to buy shares in semiconductor companies instead of providing grants. The government understands it doesn't have the expertise or time to manage such investments.

 

[hist78]

Well, the IDM 2.0 honeymoon is officially over. I have seen this with CEO changes in the past. You get 2-3 years to make it work. I never agreed with the 5 Nodes in 4 years strategy, that was doomed from the beginning. Ramping 5 nodes to HVM in four years? AMD is not in Intel's rearview mirror. Nvidia owns AI. Dozens of new chip companies are circling Intel like vultures picking at the carcass. Worst of all, the semiconductor industry is not as healthy as it seems.

Again, Intel can claim process supremacy all they want but unless their financials measure up someone is going to get fired. I think taking Intel private would give them more time but it would not solve the problems they face, if it is even possible.

Bottom line: The semiconductor industry moves very fast and Intel does not, my opinion.

Pat Gelsinger has been Intel’s CEO since February 2021. We can't say Wall Street investors didn’t give him enough time to deliver meaningful results. Three and a half years is a long time in the fast-moving semiconductor industry.

 

[hist78]

It might make sense when PG first got the job without confusing investors about the risk/cost of his strategy.

“The Intel turnaround train is leaving the station, and I hope you all get on board. It’s an ambitious goal. But I am confident Intel’s best days are in front of us,” Gelsinger said in his presentation.

Intel Stock Sinks After Pat Gelsinger Details 4-Year Comeback Plan | CRN

Shareholders responded harshly to Intel's detailed comeback plan at the Intel Investor Day meeting, sending Intel's sock down as much as 6.4 percent Friday.

www.crn.com

"“The Intel turnaround train is leaving the station, and I hope you all get on board. It’s an ambitious goal. But I am confident Intel’s best days are in front of us,” Gelsinger said in his presentation."

The more important question is: did Intel get on the train that most semiconductor buyers are eager to board? Otherwise, Intel is just a lonely passenger on a train it paid for.

 

[fansink]

Well, the IDM 2.0 honeymoon is officially over. I have seen this with CEO changes in the past. You get 2-3 years to make it work. I never agreed with the 5 Nodes in 4 years strategy, that was doomed from the beginning. Ramping 5 nodes to HVM in four years? AMD is not in Intel's rearview mirror. Nvidia owns AI. Dozens of new chip companies are circling Intel like vultures picking at the carcass. Worst of all, the semiconductor industry is not as healthy as it seems.

Again, Intel can claim process supremacy all they want but unless their financials measure up someone is going to get fired. I think taking Intel private would give them more time but it would not solve the problems they face, if it is even possible.

Bottom line: The semiconductor industry moves very fast and Intel does not, my opinion.

The longer that dog won't hunt, it becomes more and more improbable for the dog to successfully reengage.

 

[Jure]

I agree with you. PG has a string of broken promises. The most serious one is missing the AI trend. If they had persisted with the AXG group, it might be different. A lot of money was wasted on various projects. Both PG and Koduri thought it was Nvidia and not AMD that was their number one threat. Instead, they spread their resources on many other things. They should just copy what Jensen is doing and not try to be clever.

I think changing to private does not solve the fundamental issue, which is that TSMC is leading the race. A better option for shareholders is for Intel to exit its foundry strategy as soon as possible.

Citi sees big boost for Intel's margins and profits if exiting foundry

Investing.com -- Citi analysts believe Intel (NASDAQ:INTC) could significantly improve its profitability by exiting the foundry business.

finance.yahoo.com

Citi’s analyst expects that if Intel exits its foundry strategy, its EPS would revert back to $3-4. Given that this is a likely scenario, investors would prefer to let PG step down and exit his strategy.

Interesting, my view is completely different. Pat recognized the importance of gpgpu already in his previous stint at Intel. If I'm not wrong, he worked on Larabee. While that project may not have been successful, it predicted the future of computing very well. Nvidia is so successful today because of extremely performant and versatile hardware and excellent software support. Exactly the goals of Larrabee. Imo, AXG under Raja, didn't seem to be very well led. Why hire expensive and supposedly experienced people only to produce GPUs that are lacking lots of hardware for performant graphics (seems like Battlemage and Celestial are fixing this) - a repeat of VEGA imo, but that just my (outsider) view.

Also, I think Intel is very much trying to follow Nvidia. Good hardware supported by good software, but Nvidia has 15 years of advantage. Let's see what FCS bring. From what we know about Battlemage, things seem to go into the right direction. When is AMD coming out with something like OneApi?

It's controversial to say this, but Intel should forget about the shareholder value. They've been looking at shareholder value (dividends, buybacks) for the past 10 years and it did not turn out well.

 

[delong.height]

I was wondering if that is being considered for then next board meeting? What would it take? Is it even possible? Would it help Intel?

I googled around and found this article:

Going Private May Be the Best Option for Intel
Roughly a decade ago, Michael Dell had much the same problem. He needed to fix Dell and he knew that he couldn’t do it while Dell was public. So he took the company private, which gave him the time he needed to fix what had to be fixed, and then he creatively took the company public again so he could again access the investor pool of money and use shares and options for employee retention (which is often problematic for a private company).

To accomplish what Gelsinger needs to get done, he may need to take Intel private. Fortunately, he knows Michael Dell well, and I’m sure Dell would step up to help given that Dell is tied at the hip to Intel. Should Gelsinger be forced out, the result for Dell would not be good (the two CEOs get along well and I know Dell appreciates what Gelsinger is trying to do).

Gelsinger May Need To Take Intel Private to Execute on Strategy | Internet News

Gelsinger's vision for Intel is a good one, and if Wall Street won't give him the space to carry it out, Intel should go private.

www.internetnews.com

It's only possible for IFS to be split from the company then you may privatize that entity. Intel design has too much leverage that shouldn't be sold to private equity at such discount even though I'm sure wall street would pretty much want to get that fraction of the business. This includes Mobileye, Altera, Intel design. Only IFS can be privatized.

But if taking that out, there are two question one must ask?

1. What does shareholders get in terms of book value of those assets (It's undervalued no matter how you try to discount 18A)?
2. Who will be the buyer to oversee the operation of that entity? TSMC + Intel + Apple + Nvidia + Qualcomm + AMD + Broadcom might joining forces in this case.