Intel, once a dominant company in chip making, saw a dip of 20% in share price in extended trade that cost the company a loss of $24 billion in market value. This happened after the company announced the job cut and suspension of its dividend. As per the internal memo sent to Intel employees company’s CEO Pat Gelsinger said “Our costs are too high, our margins are too low,”. Intel has bluntly admitted that “Our revenues have not grown as expected- and we’ve yet to benefit from trends like AI”. The stock had closed down 7% on Thursday.
The company aims to deliver $10 billion in cost savings in 2025 which includes reducing the head count that it says will be completed by the end of the year. About the dividend company said in a memo “We will suspend our stock dividend beginning next quarter to prioritize investments in the business and drive more sustained profitability”.
It also forecast third-quarter revenue below the market estimates. On these things, CEO Pat Gelsinger told Reuters“I need fewer people at headquarters, more people in the field, supporting customers,”. And on dividend suspension, he said “Our objective is to … pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging.” Intel is said to be in the middle of a turnaround plan on developing advanced AI processors.
