There is a lot to be said for simplicity. At chip stock Intel (INTC), that theory is about to get a bit of a road test as new CEO Lip-Bu Tan is offering up a whole new battle plan for the company. Investors did not seem particularly enamored, though, as Intel shares slipped fractionally in Monday afternoon’s trading.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Now, Lip-Bu Tan is taking micromanagement to a whole new and downright frightening level, insisting that he personally review every major chip design, reports note. The policy is intended to “…improve execution and reduce development costs,” those reports noted. That may sound like a whole new bottleneck has been established, but reports note this may actually trim things down. Design decisions used to go through “multiple management layers,” so consolidating the process with the CEO’s yay or nay should be that much faster.
Tan also noted that he wants chip designs to look a lot simpler, calling for product families with “…clean and simple architectures, better cost structures, and simplified SKU stacks.”
Life Post-Lifeline
We all know that Intel got a nice infusion of cash as a result of the new equity stake that the Trump administration called for in exchange for the CHIPS Act funding. Plus, Intel also got fresh investment from SoftBank (SFTBY). But how does it follow up such an act?
Intel needs a turnaround, which is a bigger ask than some might expect given the mounting numbers of competitors in the field and the fact that Intel has been losing ground in several of its major markets for months. The manufacturing business itself is limping, the desktop business is suffering, and worse, that government ownership stake could be a problem. This is especially the case in overseas markets like China, where a United States government stake looks like extra American influence.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 25 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 28.42% rally in its share price over the past year, the average INTC price target of $22.34 per share implies 8.74% downside risk.
