The 51% stake was sold for $4.46 billion this week while Altera was bought for $16.7 billion ten years ago.
Now is a terrible time to have done such a deal. Not only is Intel under financial pressure on multiple fronts, and not only is Altera loss-making with flagging sales but the market is in a downturn – you couldn’t choose a worse set of circumstances for selling anything.
The amount of cash being raised by the deal – said to be $3.4 billion – will do something to swell the $8.25 billion cash Intel has on hand, but won’t make much difference to Intel’s struggle to catch up with a rival which is spending $40 billion on capex this year.
Meanwhile Intel has debt of $50 billion and has done two previous deals with private equity to preserve cash – one where Apollo put up $11 billion for a 49% stake in Intel’s Fab 34 in Ireland and one where Intel sold a 20% stake in its IMS Nanofabrication business to Bain Capital.
No management delinquency of the past 20 years can be worse than letting its process technology lag – process was Intel’s crowning glory – but these deals reflect how years of poor leadership can bring a great company low.
