Intel Corp. slashed its quarterly dividend by almost two-thirds, as it proceeds to cut costs after major losses.
This comes after the company announced the implementation of a series of wide-ranging cost cuts earlier this month.
Intel executives plan to take pay cuts after the chipmaker reported weak fourth-quarter numbers that caused company’s share price to tumble.
The firm’s latest results saw a $664 million net loss for the fourth quarter of 2022, after failing to meet estimates because of a steeper than expected falloff in PC chip sales.
Intel’s Market Share Falls Post-Pandemic
After a boom during the pandemic, the PC market has fallen at its most rapid pace since the 1990s, say analysts.He said that the tech firm plans on resuming growing the dividend “over time.”
“The board and I continue to view the dividend as a critical component to the overall attractiveness of Intel,” Gelsinger added, while also stating that Intel’s board remained committed to maintaining a competitive yield.
Intel’s quarterly dividend will be payable on June 1 to shareholders of record on May 7.
The dividend yield is now 1.9 percent, as of closing on Feb. 21, down significantly from its prior yield of 5.6 percent, reported CNBC.
“Prudent allocation of our owners’ capital is important to enable our IDM 2.0 strategy and sustain our momentum as we rebuild our execution engine,” Gelsinger said in a press release.
The company also reaffirmed its latest business outlook for the first quarter of 2023, expecting revenue of between $10.5 billion and $11.5 billion, with a gross margin of 34.1 percent on a GAAP basis.
US Chipmaker Plans Major Cutbacks
“We are well on our way to meeting our commitment to reduce $3 billion in costs this year as we look to deliver $8–10 billion in savings exiting 2025,” said Intel CEO David Zinsner.“While we will continue to prudently manage cash and capital outlays in the near term, we are setting the foundation for significant operating leverage and free cash-flow growth when we emerge from this period of outsized investments.”
The company has previously taken steps to reduce headcount and other operating expenses, including compensation cuts.
Intel has also exited of seven non-core businesses since early 2021, as the company attempts to sharpen its focus and improve its operating structure.
The chipmaker’s stock price has fallen nearly 60 percent from its 2021 high, as it faces a declining PC market, a glut in chip inventory, and underutilized factories.
Intel shares fell 2.26 percent, to $25.27, at the close on Feb. 22, after the news.
