Intel Growth Challenges Are Not Over Despite Altera Stake Sale: Analyst

Core Viewpoint - JP Morgan analyst Harlan Sur reiterated an Underweight rating on Intel Corp with a price forecast of $23 following Intel's announcement of a 51% stake sale of its programmable chip business, Altera, to Silver Lake Management for$ 4.46 billion, valuing Altera at $8.75 billion [1][4] Group 1: Transaction Details - Intel sold a 51% stake in Altera for$ 4.46 billion, which values the company at approximately 5.7 times its projected calendar 2024 sales [1] - The deal marks Intel's first significant strategic move under new CEO Lip-Bu Tan, aligning with the company's turnaround strategy and refocusing on its core x86 businesses [3][4] - Altera generated $1.54 billion in revenue last year, leading to a deal value of 6 times calendar 2024 sales, with an estimated revenue growth to$ 1.6 billion (+4%) by calendar 2025 [3] Group 2: Historical Context and Financial Impact - Intel originally acquired Altera for $16.7 billion in December 2015 at 9 times calendar 2014 sales, but the current transaction reflects a lower revenue profile due to a 20% revenue decline over the past 10 years compared to 87% growth in the semiconductor industry [2][4] - The sale is expected to strengthen Intel's balance sheet amid a challenging macro environment, as the company plans to de-consolidate Altera from its financial statements [4] Group 3: Leadership Changes - Raghib Hussain will succeed Sandra Rivera as CEO of Altera effective May 5, previously serving as President of Products and Technologies at Marvell Technology, focusing on AI chips and networking solutions [5] Group 4: Analyst Projections - Harlan Sur projected Intel's first-quarter revenue at$ 12.2 billion with an adjusted EPS of $0.00, while the stock closed lower by 2.26% at$ 19.85 on Tuesday [6]