According to foreign media reports cited by The Paper, on August 7th local time, Intel shareholders filed a class action lawsuit against Intel in San Francisco Federal Court. Shareholders claim that Intel "fraudulently concealed the company's existing problems," which led to weak performance, layoffs, and suspension of dividends. The company's market value evaporated by over $32 billion (approximately RMB 229.8 billion) within one day after the release of its latest financial report.
In addition to Intel Corporation, Intel CEO Patrick Kissinger and CFO David Zinsner are also listed as defendants.
Shareholders pointed out that Intel's financial report disclosed on August 1st showed that its foundry business was not progressing smoothly, and operating costs were still rising despite declining revenue, which caught the company's shareholders off guard. They believe that Intel's significant false or misleading statements about its business and manufacturing capabilities between January 25th and August 1st this year drove up its stock price.
At present, Intel has not responded to this matter.
The issue regarding Intel's OEM business can be traced back to 2021. At that time, Pat Kissinger was appointed as the CEO of Intel. He launched a restructuring plan for the company, separating Intel's semiconductor manufacturing business as a contract manufacturer to serve Intel's own chip business and external customers.
In 2024, Intel's chip foundry business will be officially separated. But the huge losses of this business have attracted widespread attention. According to a document submitted by Intel to the US Securities and Exchange Commission in April this year, the independent chip manufacturing division "Intel Foundry" achieved revenue of $18.9 billion in 2023, a year-on-year decrease of 31%, and operating losses of $7 billion.
On August 1st, Intel released its second quarter financial report for the 2024 fiscal year, which fell far short of expectations. Its revenue was $12.8 billion, a decrease of 1% year-on-year and basically unchanged compared to the previous quarter; Under GAAP (Generally Accepted Accounting Principles), Intel incurred a net profit loss of $1.6 billion, compared to a net profit of $1.5 billion last year. Intel has suffered losses for two consecutive quarters.
Intel expects its revenue for the third quarter of 2024 to be between $12.5 billion and $13.5 billion, with a GAAP loss of $0.24 per share. The forecast also shows the pressure that Intel will face in the coming quarters.
To address ongoing market challenges and internal transformation needs, Intel has announced a series of comprehensive cost reduction plans. Intel plans to reduce costs by over $10 billion by 2025 through architectural and operational restructuring, layoffs, cuts in operating expenses and capital expenditures.
Intel expects to lay off over 15% of its workforce by the end of 2024 in terms of streamlining operations and personnel costs. In addition, Intel has suspended its dividend payments since the fourth quarter as it prioritizes liquidity to support the investments needed to execute its strategy. As cash flow improves to a sustainable higher level, Intel stated that it will maintain competitive dividends.
According to Bloomberg cited by China News Service, David Zinsner said in an interview, "Our financial situation has not reached the level we want... Layoffs are necessary to enable us to have a more sustainable model in our future business
This article combines news from The Paper, 21st Century Business Herald (Reporter: Ni Yuqing), and China News Service