MBLY is down on heavy volume and the company would probably like to show balance sheet improvement.
Like the other ongoing divestitures, the Board is cleaning up the balance sheet in order to get the best return when (not if) the company is taken over or broken up and spun off.
Makes total sense from a Finance perspective, and the Board is completely full of finance types, seeking short term gain over long term investment.
I am expecting DZ to surprise investors with earnings announcement or guidance of how the debt levels will be reduced.
That would materially change investor perception, because Intel still makes a lot of revenue. It just needs to lower the leverage and cost structure.
The ongoing, continuing moderate level of layoffs are part of that, and divestiture is the other part.
Reducing debt should make the company more valuable to an acquirer, increasing the upside potential on the stock.
Improvement in the stock helps reduce the change of mass layoffs.
Groups are getting updated targets and will do headcount actions, but as the company finances improve that reduces the need for an across the board headcount cut.
It was the insistence on holding on to so much of the conglomerate that prevented reducing the debt load, because every group has capital needs.
In the case of Mobileye, Intel is an investor so selling its stake would likely go towards paying off debt.
Regardless of takeover or spin off of Foundry, the existing cash flow is insufficient to fund the various groups, and that is also driving the company to divest in so many far flung activities.
This is all a good thing and it should not have taken a crises to get the Board to sell off all these needless (non-core and often capital intensive) appendages.
Why is this important to me? They’re cleaning up the balance sheet in anticipation of change of control