About four months ago, Intel announced its intention to issue Mobilai for $ 50 billion. Good thing they did not ask for $ 100 billion. The IPO as expected was postponed. The market is not willing to pay the price:
Mobilai, which is still run by Professor Amnon Shashua (who founded the company alongside Ziv Aviram), was sold to Intel five years ago for $ 15 billion. Although Mobilai is one of the leaders in the production of systems for autonomous vehicles, it is worth $ 50 billion, while the entire large Intel is worth 180 billion and given that its sales rate is at best $ 2 billion.
Subsequent reports give an unencouraging picture of Mobilai, so it was quite expected that the IPO would not be worth $ 50 billion. Although Intel itself beat analysts’ forecasts in the top and bottom line, the market was disappointed with the forward forecast and the company’s share fell by 6.5%. Intel is the most important global company in Israel – it is one of the largest employers in the country (even the largest) and it dominates large manufacturing plants alongside development centers. It is also about to acquire the Israeli Tower Company (for more here).
From Intel’s reports you can see the distribution of revenue by segments, including Internet artificial intelligence and also Mobilai, which is defined by Intel as a separate sector and is gaining importance as one of Intel’s main growth engines. Mobilai’s revenues totaled $ 394 million, compared to about $ 377 million in the same quarter last year. Operating profit for the first quarter of 2022 was $ 148 million compared to $ 171 million for the same quarter in 2021.
One should not get excited about the decline in profits, what is most important in Mobilai’s activity is its ability to grow and in recent quarters it has been growing, after in the first years after the deal the growth was disappointing. Before Mobilai was sold to Intel in the largest Israeli exit ever, it sold at a rate of $ 600 million a year. Analysts had expected it to reach $ 1 billion within a year and a half. But only three years after the acquisition, the sales rate exceeded $ 1 billion and it is not certain that this is due to Mobilai’s basic products.
About two and a half years ago, Mobilai acquired the Israeli Mobit for close to $ 1 billion. The combination of Mobit, which provides information on available means of transportation and travel time, also contributes to the synergy between the products and the ability to provide transportation systems, especially in taxis, with scheduling and management and control capabilities through the app. So Mobilai is growing, with sales at $ 1.6 billion, probably on its way to $ 2 billion, but has Intel made a good deal? According to the pricing of the offering – $ 50 billion probably is, but if you take into account the investment in Mobilai in recent years, the subsidy for losses on the bottom line, the acquisition of Mobit, then you get that the total investment in the field is no longer $ 15.3 billion, more, how much more? Not clear, it could also be $ 20 billion. This package today probably flooded value, but neither $ 50 nor $ 40 billion. 30 billion is a question mark but certainly possible when the markets calm down. If the markets are good then even $ 40 billion is an option. More than that will only be possible if we return to the path of impressive increases on the Nasdaq.
So Intel has meanwhile folded, but Mobilai will sooner or later be a trading company.
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