Intel Shares Fall Heavily After McAfee Purchase

The acquisition of McAfee by Intel is one of the biggest such moves in the last couple of years and may well trigger a new wave of M&A, a sign that the economy is returning back to normal.

However, Wall Street has been puzzled by the move by the Semiconductor giant; shares of Intel fell significantly today as analysts and financial companies scramble to understand the motive behind the sudden move.

Shares of Intel fell 3.11 per cent to $18.98, pulling the whole computer sector down; most of its competitors with the exception of ARM holdings and Nvidia, were also treading down.

The company's stock is now nearing its lowest 52-week level with a market capitalisation of $105 billion. Some will question the fact that Intel paid well over the odds (60 per cent premium) for a software company that provides little synergies with Intel's core business.

The $7.7 billion Intel is paying for McAfee is slightly more than the $7.4 billion that Oracle Corporation paid for Sun Microsystems; ironically, Intel had an antivirus business that it sold in September 1998 to McAfee's archrival, Symantec.

It is not the first big software acquisition that Intel has done in the past few years; last year, Intel acquired Wind River Systems for $884 million, one which allowed Intel to enter the embedded devices market with a bang.