Intel Turns Bearish On Lawsuits Over Chip Flaws

Intel Turns Bearish On Lawsuits Over Chip Flaws
February 20, 2018

 
Earlier in January, the stock of semiconductor chip manufacturer Intel Corporation (NASDAQ: INTC) fell sharply, following the news that revealed that security researchers at Google’s Project Zero have identified severe flaws in processor chips, which form the core of smart phones and personal computers across the globe. At that time, Google revealed that it had informed Intel about the Spectre flaw on June 1, 2017 and Meltdown flaw before July 28, 2017. Intel, however, insisted that there is no flaw in the design. Last Friday, Intel announced that it is facing 32 lawsuits over the CPU flaws. We anticipate the stock to remain bearish until clarity emerges on the nature of impact these class action suits are likely to have on the performance of Intel.

The Mountain View, California-based chip manufacturer revealed that it was slapped with 30 customer class action lawsuits and two securities class action lawsuits as of February 15, 2018. The customer class action lawsuits claim monetary damages and equitable relief, while the securities lawsuits allege violation of securities laws by Intel and some of its officers.

In addition to the above, Intel is also facing three derivative lawsuits alleging failure on the part of some board members and officers to take action in relation to an alleged insider trading. Notably, Intel’s CEO Brian Krzanich sold $24 million of Intel stocks and options in late November. The public and investors were informed about the vulnerability thereafter.

In the meanwhile, former attorney general of Louisiana, Charles Foti, a partner at the law firm of Kahn Swick & Foti, LLC has announced that the law firm has commenced an investigation into Intel Corporation.

KSF will focus on whether Intel’s officers and/or directors have breached their fiduciary responsibilities to the shareholders, or violated federal laws.

Intel has warned that it could face many more lawsuits related to Meltdown and Spectre.

In the meanwhile, researchers Caroline Trippel and Daniel Lustig of Princeton University and Margaret Martonosi from Nvidia have found new variants of Meltdown and Spectre, which can leak private information of the user. The new variants have been named as Meltdown Prime and SpectrePrime in a research paper published by them. The unknown potential losses that may arise due to the lawsuits have turned Intel bearish in the short-term.

The chart shows a shooting star candle pattern, indicating bearishness in the stock. The main line of the MACD indicator has crossed below the zero line. Therefore, we are expecting a down trend in the stock.

Intel - Technical Analysis - 20th February 2018

To gain from the downtrend, we may trade a put option offered by a reliable binary broker. The option contract should not expire before February 28. Furthermore, the stock should trade near $46 in the NASDAQ.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

Janine

Janine

Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be


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