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Intel Buys Mobileye to Boost Presence in Autonomous Cars
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Intel Corporation (INTC - Free Report) recently announced that it is buying Israel-based Mobileye, an autonomous vehicle technology provider, for a whopping $15.3 billion in an all cash deal.
Notably, Intel is paying $63.54 for each Mobileye share. This represents a 33% premium to the Mobileye’s closing price of $47.00 as of Mar 10.
In response to the announcement, shares of Mobileye appreciated 28.24% on the bourses. However, the news failed to excite Intel shareholders and the stock was down 2.09% at the close.
We note that shares of Intel have underperformed the Zacks Semiconductor – General industry over the last one year. While the industry gained 39.5%, shares of the technology major returned a modest 11.7% during the same time period.
The underperformance can be due to growing competition in the semiconductor market.
Intel’s dominance in the chip market has come under threat due to increasing usage of ARM-based chips by the likes of Microsoft (MSFT - Free Report) in recent times. Moreover, sluggish PC demand continues to hurt its top line.
However, we believe that the latest deal will strengthen Intel’s competitive position in the autonomous car technology market, currently dominated by the likes of NVIDIA (NVDA - Free Report) and Qualcomm (QCOM - Free Report) . This will help the stock rebound in the rest of 2017.
What Does this Mean for Intel?
Per a Business Insider report, an estimated 10 million self-driving cars will hit the pitch by 2020. An IDC report states that the burgeoning Internet of Things (IoT) space is projected to be worth $1.7 trillion by 2020 with 30 billion connected “things”. Notably, Intel is fast gaining traction in the self-driving systems space through the acquisition of startups in the segment. With the buyout, Intel will now have access to Mobileye’s technologies related to cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management.
We also note that Mobileye is the company that Tesla Motors has worked with before to fulfill its autonomous vehicle dream. However, Tesla parted ways after the death of a driver trying to operate one of its Tesla Model S using Mobileye’s autonomous driving technology.
Hopefully, Mobileye has learnt its lessons after the crash as Intel is banking upon it to turn its fortunes around.
However, competition is intensifying in the space. Some notable collaborations include Ford and Baidu’s partnership to invest $150 million in Veldyne Lidar, a maker of light sensor technology. Alphabet has also partnered with Fiat Chrysler per which Google will incorporate its self-driving technology into 100 Chrysler Pacifica minivans to be used as test vehicles.
Separately, Google and Ford Motor have partnered to lead a coalition of companies that will push for federal approval of autonomous cars in the near future. Uber, Lyft and Volvo are other members of this coalition.
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
Image: Bigstock
Intel Buys Mobileye to Boost Presence in Autonomous Cars
Intel Corporation (INTC - Free Report) recently announced that it is buying Israel-based Mobileye, an autonomous vehicle technology provider, for a whopping $15.3 billion in an all cash deal.
Notably, Intel is paying $63.54 for each Mobileye share. This represents a 33% premium to the Mobileye’s closing price of $47.00 as of Mar 10.
In response to the announcement, shares of Mobileye appreciated 28.24% on the bourses. However, the news failed to excite Intel shareholders and the stock was down 2.09% at the close.
We note that shares of Intel have underperformed the Zacks Semiconductor – General industry over the last one year. While the industry gained 39.5%, shares of the technology major returned a modest 11.7% during the same time period.
The underperformance can be due to growing competition in the semiconductor market.
Intel’s dominance in the chip market has come under threat due to increasing usage of ARM-based chips by the likes of Microsoft (MSFT - Free Report) in recent times. Moreover, sluggish PC demand continues to hurt its top line.
However, we believe that the latest deal will strengthen Intel’s competitive position in the autonomous car technology market, currently dominated by the likes of NVIDIA (NVDA - Free Report) and Qualcomm (QCOM - Free Report) . This will help the stock rebound in the rest of 2017.
What Does this Mean for Intel?
Per a Business Insider report, an estimated 10 million self-driving cars will hit the pitch by 2020. An IDC report states that the burgeoning Internet of Things (IoT) space is projected to be worth $1.7 trillion by 2020 with 30 billion connected “things”. Notably, Intel is fast gaining traction in the self-driving systems space through the acquisition of startups in the segment. With the buyout, Intel will now have access to Mobileye’s technologies related to cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management.
We also note that Mobileye is the company that Tesla Motors has worked with before to fulfill its autonomous vehicle dream. However, Tesla parted ways after the death of a driver trying to operate one of its Tesla Model S using Mobileye’s autonomous driving technology.
Hopefully, Mobileye has learnt its lessons after the crash as Intel is banking upon it to turn its fortunes around.
However, competition is intensifying in the space. Some notable collaborations include Ford and Baidu’s partnership to invest $150 million in Veldyne Lidar, a maker of light sensor technology. Alphabet has also partnered with Fiat Chrysler per which Google will incorporate its self-driving technology into 100 Chrysler Pacifica minivans to be used as test vehicles.
Separately, Google and Ford Motor have partnered to lead a coalition of companies that will push for federal approval of autonomous cars in the near future. Uber, Lyft and Volvo are other members of this coalition.
Intel Corporation Revenue (TTM)
Intel Corporation Revenue (TTM) | Intel Corporation Quote
Zacks Rank
At present, Intel has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>