Intel Slashes Dividend By Two-Thirds, Updates Capital Allocation

[AleksandarK]

Intel Corporation today announced that its board of directors has reset its dividend policy, reducing the quarterly dividend to $0.125 per share (or $0.50 annually) on the company's common stock. The dividend will be payable on June 1, 2023, to stockholders of record on May 7, 2023. Intel also reaffirmed its first-quarter 2023 business outlook provided at its most recent earnings call, including revenue of between $10.5 billion and $11.5 billion; gross margin of 34.1% on a GAAP basis and 39% on a non-GAAP basis; tax rate of (84%) on a GAAP basis and 13% on a non-GAAP basis; and earnings per share of $(0.80) on a GAAP basis and $(0.15) on a non-GAAP basis.

The decision to decrease the quarterly dividend reflects the board's deliberate approach to capital allocation and is designed to best position the company to create long-term value. The improved financial flexibility will support the critical investments needed to execute Intel's transformation during this period of macroeconomic uncertainty. Since first initiated in 1992, Intel's dividend has delivered more than $80 billion in cash returns to the company's stockholders, and the board is committed to maintaining a competitive dividend.




"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," said Pat Gelsinger, CEO of Intel. "We remain on track to deliver five nodes in four years and continue to expand the IFS (Intel Foundry Services) customer base. We are well into the ramp of 13th Gen Intel Core and 4th Gen Intel Xeon Scalable processors, and we look forward to the launch of Meteor Lake and Emerald Rapids in 2023 and Granite Rapids and Sierra Forest in 2024."

In addition to its prudent capital allocation, Intel continues to take decisive actions to advance its strategy, optimize its cost structure and provide transparency to its stakeholders. These actions include:

Delivering $3 billion in cost savings in 2023, on the path to $8 billion to $10 billion in annualized savings by the end of 2025. This includes the difficult steps previously t

• aken to reduce headcount and the company's ongoing efforts to reduce other operating expenses. The company is also temporarily reducing compensation and rewards programs for employees and executives, and the board has decided to temporarily reduce its compensation as well. This is in addition to the exit of seven non-core businesses since early 2021, as the company continues to sharpen its focus and drive a best-in-class operating structure.
• Operating net CapEx intensity in the low 30% range in 2023 as the company prioritizes investment in strategic capital and adjusts the timing of capacity expansion in response to near-term changes in demand.
• Establishing an internal foundry model that will help Intel unleash the structural advantages of IDM 2.0 with a competitive cost structure and optimized operating model while providing further transparency into its strategic progress and performance against industry benchmarks.
• Advancing its Smart Capital strategy, which allows Intel to access new pools of capital that provide additional financial flexibility to invest for the long term while executing its transformation. This includes the innovative Semiconductor Co-Investment Program (SCIP), for which Intel intends to announce a second partner later this year.

"We are well on our way to meeting our commitment to reduce $3 billion in costs this year as we look to deliver $8 to $10 billion in savings exiting 2025," said David Zinsner, chief financial officer of Intel. "While we will continue to prudently manage cash and capital outlays in the near term, we are setting the foundation for significant operating leverage and free cash flow growth when we emerge from this period of outsized investments."

Webcast
Intel will hold a public webcast at 5:45 a.m. PDT today to discuss this news. Please visit https://edge.media-server.com/mmc/p/pqmxigih to register for the webcast. The webcast replay will also be available on Intel's Investor Relations website at intc.com.

View at TechPowerUp Main Site

 

[Daven]

The gravy train and Intel’s monopoly has ended. Its time to continue doubling down on being competitive. Let’s hope we have seen the last of corporate malfeasance and AMD, Intel and other CPU providers continue to try to one up each other.

 

[dragontamer5788]

Intel was already on its back legs. Intel Arc Alchemist, although competitive in recent games like Hogwarts Legacy, missed the boat on the cryptocoin surge of 2020/2021 and released its cards just a bit too late. 2022 was the wrong timing to release a card, as both AMD and NVidia cut production as older cards + mining cards flooded the market. A lot of bad timing and bad luck here.

But Intel's core product, their world-class fabs, is one or two steps behind TSMC now. No one even thinks of Intel chips as the best in the world anymore. TSMC chips are smaller, faster, more power efficient, than anything Intel can ever hope of making.

 

[john_]

Damn. Not enough dividend income to buy an Intel CPU.....

 

[AnotherReader]

It's the right call. Intel paid dividends of $ 1.5 billion in its last quarter: 2022 Q4. This money should go into R&D. IMO, they haven't gone far enough; they should have stopped all share buybacks at the same time.

 

[_Flare]

Does that mean, that if there will/would be no desktop Meteor Lake, then there will be no new desktop architecture including 2024, because the CEO didn´t talk of any?

 

[ThrashZone]

Hi,
You'd think with all these awesome 12-13 series voodoo threads intel would be pooping in high cotton now days it's very interesting that they aren't
SaturatedLakes caught up to them finally.

 

[_Flare]

Hi,
You'd think with all these awesome 12-13 series voodoo threads intel would be pooping in high cotton now days it's very interesting that they aren't
SaturatedLakes caught up to them finally.

especially when 90% of the 13th Gen parts don´t use the 2MB L2-Cache RaptorCove cores

 

[Wirko]

Intel slashes dividend before dividend slashes Intel, that seems good.

 

[SSGBryan]

It's the right call. Intel paid dividends of $ 1.5 billion in its last quarter: 2022 Q4. This money should go into R&D. IMO, they haven't gone far enough; they should have stopped all share buybacks at the same time.

The purpose of share buybacks is to manipulate the stock price.

If they stopped share buybacks, the C level executives would have seen major pay cuts. Wasn't going to happen.

 

[RandallFlagg]

It's the right call. Intel paid dividends of $ 1.5 billion in its last quarter: 2022 Q4. This money should go into R&D. IMO, they haven't gone far enough; they should have stopped all share buybacks at the same time.

Intel stopped doing share buybacks in middle of 2021. They are still authorized to do another $6B or so, but haven't.

It's the right thing for them to do. That $1.5B per quarter is pretty significant to their bottom line. They paid out almost $6B in dividends in 2022. To put it in perspective that $6B is more than all of AMDs revenue in Q4 2022, and almost 5X their net profit from all of 2022 (1.32B), 40% more than AMDs EBITDA for 2022 (3.37B).

Intel will still be spending $500M per quarter on dividends though.