Intel shareholders sue chipmaker after job and dividend cuts send stock plummeting
Intel was sued by shareholders on Wednesday, alleging that the Silicon Valley chipmaker fraudulently concealed problems that led it to report weak earnings, cut jobs, suspend its dividend and drop its market value by more than $32 billion (approximately Rs 2,68,732 crore) in a single day.
The proposed class action lawsuit against Intel, CEO Patrick Gelsinger and CFO David Zinsner has been filed in federal court in San Francisco.
Shareholders said they were surprised when Intel said on Aug. 1 that its so-called foundry business, which makes chips on a contract basis for third parties, was in trouble, costing it billions of dollars in extra costs even as revenue fell.
They said the Santa Clara, California, company’s materially false or misleading statements about the business and its manufacturing capabilities drove up its stock price from Jan. 25 to Aug. 1.
Intel declined to comment.
The lawsuit comes after Intel announced last Thursday that it would lay off more than 15 percent of its workforce, or more than 15,000 jobs, and suspend its dividend starting in the fourth quarter as part of a restructuring that aims to save $10 billion (roughly Rs 83,976 crore) by 2025.
Intel also reported a net loss of $1.61 billion (approximately Rs. 13,520 crore) in the second quarter as revenue fell one percent to $12.83 billion (approximately Rs. 1,07,742 crore).
The company has struggled to fend off competition from other chipmakers and capitalize on growth in artificial intelligence.
Rivals include Advanced Micro Devices, Nvidia, Samsung Electronics and Taiwan’s TSMC.
Intel’s stock price fell 26 percent to $21.48 (roughly Rs 1,803) on August 2, a day after the company reported quarterly results, layoffs and dividend suspension.
The shares closed 3.6 percent lower at $18.99 (roughly Rs. 1,594) on Wednesday and are down 34.6 percent since the announcement.
The case is Construction Laborers Pension Trust of Greater St. Louis v Intel Corp, US District Court, Northern District of California, No. 24-04807.
© Thomson Reuters 2024
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