Intel’s drastic dividend change – from a steady $0.365/share to a much smaller $0.125 – comes as the chip giant battles tough economic conditions and struggles to keep up its stock price amid falling sales and profits. Some analysts are already calling for the company to consider selling off its valuable assets, which would likely result in even more belt-tightening by management. This move could further squash investor confidence in Intel and add further pressure on its stock price, which may be why it’s now offering buyers a tiny consolation prize in the form of an unchanged dividend instead of risking another big payout cut down the line
As Intel keeps its payout steady while issuing warnings for the year ahead, shareholders may begin to worry about how sustainable these levels of dividend payments will be. With many troubling signs pointed in the company’s direction, such as its negative outlook and smaller stockpile of cash reserves, there is a greater possibility that Intel’s generous dividend payments could be cut sometime in the near future.
With Intel slashing jobs and compensation, it seems that the company is feeling the impact of technological advancements from challengers like Qualcomm. In order to stay ahead, Intel has decided to invest in its own foundry as well as continue developing cutting-edge chip designs. While these moves may be risky, they are still on track according to CEO Pat Gelsinger.
Intel Corporation (INTC) plans to increase its investment in future processors while maintaining profitability. This strategy will enable Intel to continue building the next-generation of integrated device management (IDM) platforms, which will help accelerate its transformation into a technology company.
Intel is cutting its workforce by thousands, most likely in the upcoming quarter. Rumors are that this number could be as high as 10,000 people. This action may seem drastic, but it is common for large companies to reduce their headcount in order to maintain competitiveness and continue to grow.
The company has been struggling in recent quarters, with revenues declining by 32% on the year before. All eyes are now on how the company will be doing in the year ahead with current and future orders. Gelsinger dismissed recent reports alleging chip delays as “rumors” in a call today, but this could only serve to increase investor concerns. With such weak earnings and concerns around potential delays to their product line-up, it’s hard to see how this company can start turning around soon enough.