On Tuesday, Dan Leob, an Activist Investor urged Intel to work on its strategic possibilities such as a possible breakup of the chipmaker and the sale of assets.
Dan Leob’s Third Point LLC has “built a significant stake” in Intel and plans to push for changes, including potentially nominating board directors, he wrote to Intel Chairman Omar Ishrak. he also added that the computer chip giant has dramatically underperformed in the past five years, including losing more than $60 billion in market value this year alone.
“We cannot fathom how the boards who presided over Intel’s decline could have permitted management to fritter away the company’s leading market position while simultaneously rewarding them handsomely with an extravagant compensation package,” Loeb said in the letter adding, “Stakeholders will no longer tolerate such apparent abdications of duty.”
Third Point’s letter pointed that Intel has lost its pole position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co Ltd, and others.
Intel customers, such as Apple Inc, Microsoft Corp and Amazon.com Inc, are developing their own in-house silicon solutions and sending those designs to be manufactured in East Asia. Intel needs to offer some new solution to retain its customers.
Intel’s Share price climbed after the news:
In response to the letter Intel said “Intel Corporation welcomes input from all investors regarding enhanced shareholder value,” it added, “In that spirit, we look forward to engaging with Third Point LLC on their ideas towards that goal.”
After Intel’s response, Intel shares rose 6.1% to $49.95, the highest in eight months, giving the company a market value of more than $200 billion. The stock had declined about 21% this year, compared with a 43% rise in the Nasdaq Composite Index.
Intel is going through the crisis from last one decade The Santa Clara, California-based company has been the largest chipmaker for most of the past 30 years by combining the best designs with cutting-edge factories. Most other U.S. chip companies either shut or sold plants and tapped other firms to make the components. Intel kept going, arguing that doing both improved each side of its operation and created better semiconductors. That strategy is being questioned now as the company’s manufacturing capabilities fall behind the new industry leader Taiwan Semiconductor Manufacturing Co.