Why Intel-Altera Deal 'Would Make A Lot Of Sense'?

Shares of Altera Corporation

and Intel Corporation

rose significantly during late trade on Friday and closed the day up 28.39 percent and 6.38 percent respectively on reports that the latter may be looking to buy the former. Alex Gauna from JPM Securities was on CNBC Friday to discuss the possibilities of the deal. "It's [Intel's stock] is up because the deal would make a lot of sense for the company," Gauna said. "We already know that Intel and Altera are in partnership together." He continued, "Altera potentially representing Intel's first big break into the foundry business, but more importantly we know that FPGAs [field-programmable gate arrays] with their massively parallel capabilities are serving a strong role in accelerating the data centre and that's really the core in the Intel story." "So, this deal would make a lot of sense, it'll be interesting to see if they get it done." Lots Of Challenges Gauna was asked to explain what Intel making a big move in the foundry business means, is it related to data centres he mentioned before. He replied, "That's part of it, I think Intel also has a lot of challenges as we know from their recent [three] announcement in trying to grow their business. So, I think Intel tries to pursue opportunities say like an Apple, it has needed players like Altera to come in and try to [prove] that roadmap for them." "So, there are a couple of different facets to this and in addition to just getting the data centre acceleration, Intel needs to fill its [tabs] and it's obviously struggling to do that with PC growth waning here," Gauna concluded.