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Intel’s headquarters in Santa Clara, California.
Justin Sullivan / Getty Images
Intel
The shares were sold in Tuesday’s trading after news emerged that activist investor Daniel Loeb of Third Point acquired a significant stake in the chip maker and was pressuring it to explore strategic alternatives.
Shares rose up to 5.7% in the afternoon after Reuters reported that Loeb’s hedge fund has an almost $ 1 billion stake in the $ 200 billion company.
Loeb, who recently pushed for
Walt Disney
(DIS) to focus more on its streaming platform and permanently suspend its dividends, is asking Intel (ticker: INTC) to hire an investment advisor to help the chip maker determine whether to remain an integrated device manufacturer and whether to divest some of its recent acquisitions.
The investor activist added that it was critical for Intel to retain customers like Apple (AAPL),
Microsoft
(MSFT), and
Amazon.com
(AMZN) instead of allowing them to send their production abroad.
Intel has faced a lot of criticism in recent years, when its role as market leader was given over to rivals like
Advanced micro devices (AMD),
Nvidia
(NVDA), and
Semiconductor manufacturing in Taiwan
(TSM). Intel shares are traded at about 10 times future earnings, making them resemble defeated stocks
General Electric (GE),
instead of their peers, who trade up to 50 times the profits.
In a cover story last month, Barron’s detailed how Intel does not deserve its low rating and that it has better days ahead.
In a statement on Tuesday, Intel said that it “appreciates the opinion of all investors regarding the increase in shareholder value” and that it expects to become involved with Third Point.
Intel’s decline represents a national security concern, Loeb wrote in a letter to Omar Ishrak, Intel’s chairman.
“Without an immediate change at Intel, we fear that America’s access to the supply of cutting-edge semiconductors will erode, forcing the United States to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers, infrastructure criticism and more, ”Loeb wrote.
Write to Carleton English at [email protected]