Intel Stock (NASDAQ:INTC) Jumps as Layoffs Poised to Hit

We knew it was coming, though we did not exactly know when. But the latest word out for chip stock Intel (INTC) is that the newest round of layoffs will start hitting this July. While many of the specifics are still being kept close to the vest, the fact that this is only the newest round of layoffs does potentially spell trouble. However, investors are very pleased, and sent shares up nearly 3% in Monday afternoon’s trading.

The layoffs will start up not long after the Fourth of July holiday, starting up in “mid-July” to be concluded before the month itself is. It is unclear how many jobs will be cut, or from which departments, but reports suggest that Intel Foundry is likely to be hit the hardest by the cuts. That is Intel’s internal manufacturing arm, which has come under a lot of fire of late.

But reports also suggest that Intel China is likely to take a pounding from these layoffs, with potentially one in five set to be shown the door. Some teams may be slated for “even deeper” cuts, reports noted. Intel Israel is also being targeted, though the Kiryat Gat manufacturing facility is likely to see most of those cuts come from middle management. That is in keeping with earlier reports which suggested that Intel was looking to pare back its bureaucracy substantially.

Breakup: The Only Solution?

And with Intel Foundry about to lose a lot of employees, some are wondering if divesting the group is the only real solution for Intel’s overall woes. Admittedly, Intel Foundry used to be a valuable part of Intel, back when it both designed and made its own chips, that were the fastest the world had ever seen. But with more and more chip makers getting into the fray, Intel’s advantages have been, mostly, lost.

If Intel were to get rid of Intel Foundry, reports suggest, several advantages could be gained. A separate Intel Foundry might be in a better position to pursue customers currently locked in with Intel’s competitors. Reports suggest Intel as it is lacks a bit in customer service fundamentals, but with Intel Foundry separate, that could be all it needs to bring those elements back. But trying to separate Intel from Intel Foundry would be a complex task, and one that may ultimately do more harm than good if the wrong veins or arteries are cut.

Is Intel a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 34.99% loss in its share price over the past year, the average INTC price target of $21.30 per share implies 2.82% upside potential.

See more INTC analyst ratings

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