After Posting Big Loss, Intel Slashes Quarterly Dividend By Over 66% to 12.5 Cents

Edited by: TJVNews.com

Intel is slashing its quarterly dividend by 66% as the chip maker attempts to rejuvenate sales in a market that where competition is increasing as some corporations and households cut back on tech spending, the AP reported on Wednesday.

After posting a $664 million fourth-quarter loss last month and sticking by a pessimistic outlook from January, Intel said Wednesday that trimming its payout to shareholders will provide more flexibility as the company attempts to transform operations during a period of “macroeconomic uncertainty.”

The AP reported that Intel Corp. is lowering its quarterly dividend to 12.5 cents per share, a cut of almost two-thirds from the 36.5 cents it has paid since early 2022. The dividend will be payable on June 1 to shareholders of record on May 7.

The Santa Clara, California, company reiterated Wednesday that it expects to post first-quarter revenue of between $10.5 billion and $11.5 billion. Analysts polled by FactSet expect $11.12 billion, as was reported by the AP. Shares, down 11% over the past month, fell slightly to $25.90.

CNBC reported that Intel CEO Pat Gelsinger said on a call with analysts that the company’s board was cautious in weighing the first dividend cut since 2000. He added Intel intended to resume growing the dividend “over time.”

“The board and I continue to view the dividend as a critical component to the overall attractiveness of Intel,” he added. CNBC reported that Intel shares were largely flat at Wednesday’s open after the news.

Gelsinger insisted on the call that both he and the board remained committed to maintaining a competitive yield. Intel’s dividend yield is now 1.9%, based on Tuesday’s closing price, down significantly from its prior yield of 5.6%, as was reported by CNBC. The dividend will be payable on June 1.

In a press release, Gelsinger said, “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,” the CNBC report said.

The company also reaffirmed its recently issued outlook for the first quarter of 2023. CNBC also reported that Intel guided to a 15 cent non-GAAP loss per share but didn’t provide full-year guidance, citing economic uncertainty.

Intel’s most recent results, a top- and bottom-line miss and a $664 million net loss for the fourth quarter of 2022, sent its share price sharply down. “No words can portray or explain the historic collapse of Intel,” Rosenblatt analyst Hans Mosesmann wrote after the earnings report, as was reported by CNBC.

Few other large-cap companies have made such sizable cuts in recent memory. CNBC reported that asset manager Blackstone took its dividend from $1.27 to $0.90 in Oct. 2022, and telecom giant AT&T slashed its dividend nearly in half in early 2022.

Other firms have cut dividends in recent weeks. Rio Tinto, one of the largest mining concerns in the world, slashed its dividend Wednesday. BHP, another mining firm, announced a $0.90 dividend on Monday, down 40% year-over-year, according to the CNBC report.

In December 2021, Intel announced that it acquired Israeli startup Screenovate.

At the time, a source told the Israeli business daily Globes that Intel was paying $100 million for Screenovate, which is 10 times the $10 million it had raised.

JNS reported that the acquired company develops screen-duplication solutions that allow interaction between multiple devices. Intel invested in Screenovate in 2014; after the acquisition, the Israeli company will join Intel’s Client Computing Group, according to Globes.

“The many research studies that we have conducted have found the enormous importance of the user experience, regardless of what device is being used,” said Intel Vice President of Client Engineering Jim Johnson.

Screenovate Founder and CEO Joshua Glazer said, “the opportunity to become part of Intel with its market coverage, technology power and excellent connections opens new horizons for all of us.”