It's been a bad few months for Intel. But some analysts fear things are about to get a whole lot worse for the chipmaker.
After Intel posted a painful $1.6 billion second-quarter loss at the beginning of August, its stock suffered a historic slump, prompting CEO Patrick Gelsinger to announce job losses affecting 15,000 people, including his "friends."
Now details of the next challenge awaiting the firm once known as Chipzilla have emerged - which may prompt staff and investors to ask whether its current situation is starting to look all too dinosaur-like.
"Intel being removed was likely a long time coming," Ryan Detrick, chief market strategist at the Carson Group, told Reuters.
In 1999, during the dot-com era, Intel snuck in behind Microsoft to become the second tech firm to join the Dow Jones Industrial Average Index, to give its full name.
Yet its share price slump could lead to Intel being taken off the blue-chip index until its fortunes change.
Over the past year, Intel has been hit by a stock decline of almost 60%, making it the Dow's worst performer, with the lowest stock price of any of the companies on the Index.
Why are companies removed from the Dow Jones Industrial Average Index?
There are many reasons why a firm might get booted off the Dow. If a company's share price drops too low or if starts to lose influence on the Dow, it's pulled out of the line-up and replaced with another company.
The price-weighted index weights each component stock according to its share price, so that stocks with higher prices have a greater influence on the index’s overall performance.
If a company’s stock price falls significantly, its impact diminishes and it may be replaced with a company whose stock price and performance better reflect current economic conditions.
The UnitedHealth Group currently has the highest score, at almost 9%, compared to Intel's 0.72%. Its stock is also selling for almost 30 times as much as Intel's.
The Stack understands that Intel redundancies will start to bite in September. A source told us that 30% of people effected work in marketing, but we have not been able to verify this officially.
The layoffs will be among the largest in Intel’s history and come after its new foundry group and data centre segment divisions both struggled.
The former posted an operating loss of $2.8 billion and data centre segment’s revenues were down 3% to $3 billion. (Compare that with rival AMD’s 115% rise in Q2 data centre segment revenues, to $2.8 billion.)
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