Friday, August 9th 2024
Intel Faces Shareholder Lawsuit Amid Financial Turmoil and Layoffs, Company Misled Investors
According to a recent report from Reuters, tech giant Intel is facing a significant legal challenge as shareholders file a lawsuit following a dramatic plunge in the company's stock price. The legal action comes from Intel's recent announcement of dividend suspensions and plans to lay off over 15,000 employees. The semiconductor behemoth saw its market value plummet by a staggering $32 billion in a single day, leaving investors reeling. The Construction Laborers Pension Trust of Greater St. Louis has initiated a proposed class action suit, naming Intel, CEO Pat Gelsinger, and CFO David Zinsner as defendants. The plaintiffs allege that the company made misleading statements about its business operations and manufacturing capabilities, artificially inflating its stock price between January 25 and August 1.
Intel's financial woes stem from underperforming contract foundry operations and 1% drop in revenue during the second quarter of 2024. While it may seem miniscule, declining revenue is paired with a negative 15.3% operating margin, resulting in a net loss of $1.61 billion. The company's August 1 announcement caught many shareholders off guard, prompting accusations of inadequate disclosure and transparency. This lawsuit is just one of several legal battles Intel is currently strangled in. The company is also locked in a patent dispute with R2 Semiconductor across multiple European countries, centering on voltage regulation technology. While Intel has secured a victory in the UK, it faces ongoing litigation in Germany, France, and Italy. Adding to Intel's troubles, a separate class action lawsuit is being explored on behalf of customers who purchased potentially faulty 13th and 14th-generation processors. The company also canceled its September 2024 Innovation event, citing poor financials, without any words on Arrow Lake or Lunar Lake. While the cancelation of events is sad, it is necessary to get financials back on track, and product launches should continue as usual.
Sources:
Reuters, via Tom's Hardware
Intel's financial woes stem from underperforming contract foundry operations and 1% drop in revenue during the second quarter of 2024. While it may seem miniscule, declining revenue is paired with a negative 15.3% operating margin, resulting in a net loss of $1.61 billion. The company's August 1 announcement caught many shareholders off guard, prompting accusations of inadequate disclosure and transparency. This lawsuit is just one of several legal battles Intel is currently strangled in. The company is also locked in a patent dispute with R2 Semiconductor across multiple European countries, centering on voltage regulation technology. While Intel has secured a victory in the UK, it faces ongoing litigation in Germany, France, and Italy. Adding to Intel's troubles, a separate class action lawsuit is being explored on behalf of customers who purchased potentially faulty 13th and 14th-generation processors. The company also canceled its September 2024 Innovation event, citing poor financials, without any words on Arrow Lake or Lunar Lake. While the cancelation of events is sad, it is necessary to get financials back on track, and product launches should continue as usual.
56 Comments on Intel Faces Shareholder Lawsuit Amid Financial Turmoil and Layoffs, Company Misled Investors
And George is right that the into from analysts on WS is generally BS and superficial. Very few of these analysts actually know wtf the industry is like. None of them saw AMD coming till it smacked Intel, too big to fail they said. I bought into AMD when it was $2 bux and change. I saw the writing on the wall with Mantle... and many others on forums like this saw it coming too. But Wallstreet, sheesh the ignored the facts, Intel is a juggernaut, ain't never going to happen. Some of these clowns were still pushing INTC on CNBS last month.
Trust me on this, in the Annual Report and proxies the risks Intel faces and now face were disclosed to shareholders. Their lawyers and accountants made damn sure of this. How do I know this - first hand experience in two public companies.
Wall Street functions as a marketplace for stocks and bonds. It is the gazillion analysts that post clickbait "buy this now by the bucket load" that mislead people because they are just after clicks. Prudent investors knew Intel was in for some heartaches, in particular with their Foundry plans.
I owned Intel stock for a long time - but sold it 2022. I'm not bragging but really guys the writing was on the wall.
MV = [ fn (revenue streams from IP, growth) + fn (profit streams from assets, growth) + fn (asset values) + fn (hype) ] x fn (industry specific belle vs. dog factor)
i see shifts in asset values, which assets can make profits, hype, belle factors. Nothing to do with profits last quarter. A decent defence lawyer can stop these vultures and countersue for defamation
*******
Notwithstanding, Intel cannot produce cheap-as-chips microprocessors. They need to produce cheaper cpus but can't. Their overheads and production costs are too high. And someone changed their "g" growth predictions and whoosh, 50% MV disappears.