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Intel (INTC) Boosts Liquidity With Mobileye Secondary Offering

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Intel Corporation (INTC - Free Report) , per a regulatory filing, is offering 35 million Class A common stock of its wholly-owned subsidiary Mobileye Global Inc. (MBLY - Free Report) , with a 30-day option to underwriters to purchase an additional 5.25 million shares. The secondary offering of the Israel-based advanced driver assistance systems (ADAS) and autonomous driving technologies provider is likely to generate about $1.5 billion for Intel to fuel its investment plans.

Intel acquired Mobileye in 2018 for $15.3 billion to rapidly penetrate the autonomous car technology market, currently dominated by the likes of NVIDIA and Qualcomm. With the buyout, Intel gained access to Mobileye’s technologies related to cameras, in-car networking, sensor chips, roadway mapping, cloud software, machine learning and data management. This increased its customer base and augmented its top-line growth.

However, the company has been facing dwindling overall sales largely due to PC inventory correction and contraction in the server market. Revenues declined significantly in first-quarter 2023 owing to a challenging macroeconomic environment, uncertain business conditions and softening demand trends. Softness in the end consumer and educational market demand is likely to remain an overhang on the company’s performance.

Consequently, top management has embarked on a massive investment roadmap by developing new manufacturing hubs and improving its operating technology to bring the company back to its growth trajectory. The public offering of Mobileye stock is perhaps an initiative in this regard, although it is likely to reduce its ownership stake to about 88%.

Intel is betting big on the IoT business and is investing heavily to gain a higher market presence. While the focus was earlier on making the best computing chips and generating industry-leading margins from them, the company now prefers to focus on a product range targeting different market segments. Management believes that although the higher-end businesses in more developed economies continue to look up, the new strategy should help it get into many more device categories, where Intel products will likely continue to enjoy a premium based on performance and TCO.

The stock has lost 31.5% over the past year against the industry’s growth of 51.8%.

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Intel currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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