Why Intel Stock Didn’t Light a Fire Under Investors Friday

Some investors may have seen a missed opportunity with the latest news about Intel (NASDAQ: INTC) Friday. A media report claimed that the company rejected an offer to buy one of its less popular business units. As a result, an ambivalent market traded the chip maker’s stock sideways. It ended by closing flat on the day, marking a slightly better trading session than marginally down S&P 500 index.

The major division is not for sale, apparently

Bloomberg reported after the market closed on Thursday that UK peer Intel Arm holds (NASDAQ: ARM) approached the US chip giant about acquiring the products division. Citing an unnamed “person with direct knowledge of the matter,” the financial news agency said the effort was rejected, with Intel saying the business was not for sale.

A divestment of the product division would have fundamentally changed Intel. It is one of the company’s two main divisions, the other being its Intel Foundry Services (IFS) manufacturing arm. Earlier this year, Intel split its operations this way as part of a larger restructuring effort. There has been speculation that the chip maker, which has fallen on hard times, is preparing to split into two separate companies.

It was unclear how much Arm Holdings would be willing to pay for the products division. Neither she nor Intel have yet to comment on the Bloomberg report.

A glass half empty or half full?

The flat trajectory of Intel shares following the news indicates a difference in investor sentiment about such a sale. On the one hand, it would give the company plenty of capital to show off its foundry ambitions; on the other hand, it would completely eliminate a core part of its business. Management will now be under increased pressure to improve the performance of the product division.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: November 2024 $24 short calls on Intel. The Motley Fool has a disclosure policy.

Why Intel Stock Didn’t Light a Fire Under Investors Friday was originally published by The Motley Fool