Intel cuts dividend by 66% and confirms forecast for the first quarter

(Bloomberg) — Intel Corporation, the world’s largest computer processor maker, has cut its dividend to its lowest level in 16 years to save cash and focus on the bailout.

Most read by Bloomberg

The company will cut its quarterly investor payouts to 12.5 cents per share for holders, due on June 1, the chip maker said in a statement Wednesday. Intel’s current quarterly dividend is 36.5 cents and is projected to be over $6 billion in 2023. The new payment resets Intel’s dividend to levels not seen since 2007.

“The decision to cut the quarterly dividend reflects the board’s thoughtful approach to capital allocation and is intended to provide the company with the best conditions for long-term value creation,” Intel said in a statement. “Improved financial flexibility will support the critical investments required to drive Intel’s transformation during this period of macroeconomic uncertainty.”

In its earnings call last month, Intel forecasts one of the worst quarters in its history as a slowdown in personal computer sales disrupts the semiconductor industry.

Chip companies are experiencing a sharp drop in demand for PC processors that has wiped out profits and led to severe layoffs in the industry. Intel is cutting jobs and cutting spending on building new factories to save up to $10 billion. It suffers especially from the loss of market share to competitors.

In a turbulent market for its products, Intel is investing heavily in line with CEO Pat Gelsinger’s plan to reclaim its leadership in the industry. Gelsinger creates new products and tries to compete with larger competitors in new markets.

The cut in shareholder payouts undermines Intel’s position in the growing competition among chip makers for higher profits. Historically, industry companies have not paid dividends, reflecting the volatility of their cash flows amid large fluctuations between surplus and deficit in an industry worth more than $500 billion. This has changed in recent years and dividends have become important, not least because they demonstrate confidence in the stability of a company’s finances.

Separately, the company repeated its forecasts for the current period, given at the end of January. First-quarter revenue will be between $10.5 billion and $11.5 billion, with a loss excluding certain items of 15 cents per share.

Shares of Intel, one of the worst in the Philadelphia Stock Exchange Semiconductor Index this year, lost about 1% in 2023 through Tuesday’s close.

–With the assistance of Thyagaraju Adinarayan.

(Updates with company comment in third paragraph)

The most read edition of Bloomberg Businessweek

© 2023 Bloomberg LP

Content Source

News Press Ohio – Latest News:
Columbus Local News || Cleveland Local News || Ohio State News || National News || Money and Economy News || Entertainment News || Tech News || Environment News

Related Articles

Back to top button