We all knew that new CEO Lip-Bu Tan was going to make some changes at chip stock Intel (INTC). We were hoping for it, in some sense; clearly, something needs to be done to turn Intel around. But the newest reports suggest that no option is off the table, including one that is downright catastrophic. Even investors quailed at the notion, sending shares down modestly in Thursday afternoon’s trading.
So what is this measure that is sending Intel sliding in today’s trading? A 50% layoff. Yes, you read that number correctly; Lip-Bu is reportedly considering a layoff of what amounts to half of Intel’s workforce in a bid to pull the company out of its downward spiral. And this downward spiral might be worse than some imagined; reports suggest the firings will be done to “…save the technology giant from a possible bankruptcy.”
Naturally, one of the key elements in the new CEO’s plan is a push for greater efficiency. This is common, of course. Certainly, Intel could use the cash from some cost savings to put into research and development, particularly into artificial intelligence, where Intel has lagged for some time. But the idea of a 50% layoff just sounds like a bridge, or several, too far. Still, that may be more the high-water mark for effect rather than an actual plan; we already knew some layoffs were likely after Intel pulled out the magic phrase “tough decisions.”
One for the Gamers
But the news was not all doom, gloom and layoffs. One note about the Intel Arc graphics driver suggests that it delivers performance in a pretty big way. When tested with Call of Duty: Black Ops 6, the Intel Arc driver gave a performance boost of “up to 15% average FPS” when measured on a personal computer. And, perhaps best of all, the 15% performance boost came when the game was set to “Extreme” settings.
Known as the “Game On” driver, it is designed to support the new Battlemage line of graphics cards, which have already seen some excellent sales numbers at last report. The only downside to the report was that some shadows proved to be ‘…darker than expected,” which could pose some problems for players. Still, performance increases on that level are likely to, ultimately, prove welcome.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 27 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 43.31% loss in its share price over the past year, the average INTC price target of $23 per share implies 3.48% downside risk.
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