Intel in Talks to Sell Connectivity Unit to MaxLine

Intel is in talks to sell a connectivity unit, which makes chips for home internet access gear, to MaxLinear, a media report says.
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Intel (INTC) - Get Report is in talks to sell a connectivity unit, which makes chips for home internet access gear, to semiconductor company MaxLinear (MXL) - Get Report, a media report says.

No final decision has been made and Intel could keep the connected home division, Bloomberg reported, citing people familiar with the matter.

Intel’s connected-home business makes chips that enable WiFi and manage data traffic for consumers. The chips provide wireless connections in home routers and gateways.

An Intel spokeswoman declined to comment on "any rumors and speculation." MaxLinear did not respond immediately to a request for comment.

Intel's Chief Executive Bob Swan has said that the world’s largest chipmaker, based in Santa Clara, Calif., is looking at reducing its footprint in areas where it isn’t competitive, Bloomberg reported.

In July, Apple (AAPL) - Get Report agreed to acquire the majority of Intel's smartphone modem business in a $1 billion transaction.

A statement at the time said some 2,200 Intel employees will join the Cupertino, Calif., tech company, along with the acquisition of intellectual property, equipment and leases.

In January, Intel easily cleared Wall Street expectations and management guided for a much stronger 2020 than analysts anticipated.

Earnings per share for the December quarter grew 19% year-over-year to an adjusted $1.52, beating Wall Street estimates of $1.25. 

Revenue rose 8% to $20.2 billion, beating analysts expectations of $19.23 billion. Gross margin widened to 60.1%, beating estimates of 58%.

Data-center revenue grew 19%, "driven by robust demand from cloud service provider customers and a continued strong mix of high-performance second-generation Intel Xeon Scalable processors," the company said.

Data-center revenue had been expected to rebound after a rough 2019.

Management guided for full year 2020 revenue of $73.5 billion, better than analysts' estimates of $72.4 billion. 

For the year the company is looking for adjusted earnings per share of $5 on an operating margin of 33%, against Wall Street's expectation of $4.66 and a margin of 31.9%.

Intel shares at last check were down 1.7% to $66.11, while MaxLinear was up 1.6% at $18.65.