Shareholders on Wednesday sued Intel, alleging that the Silicon Valley chip maker illegally concealed problems that led to poor results, job cuts and a suspension of dividend payments, and caused the company’s market value to fall by more than $32 billion (roughly Rs 2,68,732 crore) in a single day.
A proposed class action lawsuit against Intel, its CEO Patrick Gelsinger and its CFO David Zinsner has been filed in federal court in San Francisco.
Shareholders said they were surprised when Intel disclosed on Aug. 1 that its so-called foundry, which makes chips for third parties, was “in decline,” adding billions of dollars in costs even as revenue fell.
They said the Santa Clara, California-based company’s false and misleading statements about its business and production capabilities inflated its stock price between Jan. 25 and Aug. 1.
Intel has not yet commented on the matter.
The lawsuit was filed after Intel announced on Thursday that it would lay off more than 15 percent of its workforce, or more than 15,000 positions, and suspend dividend payments from the fourth quarter as part of a restructuring aimed at saving $10 billion (about Rs 83,976 crore) by 2025.
Intel also reported a net loss of $1.61 billion (roughly Rs. 13,520 crore) in the second quarter, while revenue fell one per cent to $12.83 billion (roughly Rs. 1,07,742 crore).
The company was struggling with competition from integrated circuit manufacturers and benefiting from the development of artificial intelligence.
Its rivals include Advanced Micro Devices, Nvidia, Samsung Electronics and Taiwanese company TSMC.
Intel’s share price fell 26 percent to $21.48 (about Rs 1,803) on August 2, a day after it announced quarterly results, cut jobs and suspended dividend payments.
The company’s shares closed Wednesday down 3.6% to $18.99 (about 1,594 rupees) and are down 34.6% since the announcement.
The case is Construction Laborers Pension Trust of Greater St. Louis v Intel Corp, U.S. District Court, Northern District of California, No. 24-04807.
© Thomson Reuters 2024
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