Intel Corporation (NASDAQ:INTC) is currently facing a lot of headwinds from declining PC sales. Intel Corporation (NASDAQ:INTC) stock also had lost more than 18% of its value since the beginning of this year as it started trading on Friday. Dow Jones Sources said on Friday that Intel Corporation (NASDAQ:INTC) is in talks to buy its rival Altera Corporation (NASDAQ:ALTR), which surged the Intel Corporation (NASDAQ:INTC) stock up by more than 6%. But even bigger impact was felt by Altera Corporation (NASDAQ:ALTR) stock which surged by more than 24% as the news broke out. Fast Money traders Dan Nathan, Steve Grasso, Guy Adami and Brian Kelly dissected the potential deal between the Chip makers on CNBC.
Nathan pointed out that Intel Corporation (NASDAQ:INTC) is struggling with the lack of growth and Altera Corporation (NASDAQ:ALTR) doesn’t make chips which go into PC’s and servers. Nathan feels that Intel is looking to diversify at the right time, since PC market is not doing very well at the moment for them. He said that Altera is not a fast growing company as analysts projected that it could grow only 7% for this year. He feels that this might be a way to reduce costs or diversify or put some good use to the cash that they have.
Grasso thinks that this deal might not help Intel a lot going forward as the market has chosen not to buy Intel Corporation (NASDAQ:INTC) stock, irrespective of the deal with Altera Corporation (NASDAQ:ALTR).
“Intel is down a 11%. I think this is sort of a fleeting effort for them to hold on to something. The market has chosen other choices besides Intel and its not even in their space. I don’t think it’s a good deal. I am saying period, the market has chosen not be a buyer of Intel this year. So I don’t think this deal is going to help them longer term. This is a Friday. So lets look at next week,” Grasso said.
Adami pointed out that Altera Corporation (NASDAQ:ALTR) has not done well for the last two quarters. He mentioned that 5 analysts have reduced their price targets on Altera Corporation (NASDAQ:ALTR) post the January quarter. He feels that Intel is buy their way to growth, since they could not find any organic growth.
This deal has not just rallied the Intel and Altera stocks, but also the other stock in the Chip industry.
Kelly said that we need to look out for Xilinx, Inc. (NASDAQ:XLNX) stock, which surged by around 5% as the news broke out of Wednesday. He feels that it is the closest competitor that they have.
Disclosure: None
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