Intel is being sued by shareholders who said the Silicon Valley chip maker fraudulently concealed problems that led it to post weak results, slash jobs and suspend its dividend, and caused its market value to sink more than US$32-billion in a single day.
The proposed class action against Intel, CEO Pat Gelsinger and chief financial officer David Zinsner was filed in San Francisco federal court on Wednesday.
Shareholders said they were blindsided when Intel revealed on 1 August that its so-called foundry business for making chips on contract for outsiders was in their words “floundering”, costing billions of dollars extra even as revenue declined.
They said the Santa Clara, California-based company’s materially false or misleading statements regarding the business and its manufacturing capabilities inflated its stock price from 25 January to 1 August.
Intel had no immediate comment.
The lawsuit came after Intel said last Thursday it would lay off more than 15% of its workforce, or more than 15 000 jobs, and suspend its dividend starting in the fourth quarter as part of a restructuring meant to save $10-billion in 2025.
Intel also posted a $1.6-billion second-quarter net loss, as revenue fell 1% to $12.8-billion.
Shares tank
The company has struggled to fend off competition from rival chip makers and benefit from growth in artificial intelligence. Among its rivals are AMD, Nvidia, Samsung Electronics and TSMC.
Intel’s share price tumbled 26% to $21.48 on 2 August, the day after it announced quarterly results, the job cuts and the dividend suspension. The shares closed on Wednesday down 3.6% at $18.99 and have fallen 34.6% since the announcement. — Jonathan Stempel, (c) 2024 Reuters
