Intel Faces Shareholder Lawsuit Amid Financial Turmoil and Layoffs, Company Misled Investors

[AleksandarK]

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.



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[Chaitanya]

It never rains but it pours.

 

[katzi]

and i oop...

 

[Gigaherz]

Down, Down, Down !

 

[londiste]

How does 99% drop in revenue work exactly?
Spoiler: it doesn't, Reuters says 1% drop in revenue.

 

[Dr. Dro]

I'm just waiting for the all-time low to buy. It's not there yet, close. Keep up the bad press, I need these papers to be cheap to make a lot of dough when they bounce back. - such a shame I was a broke teenager when $AMD was $1.40

How does 99% drop in revenue work exactly?

https://www.reuters.com/legal/intel-is-sued-by-shareholders-alleging-securities-fraud-2024-08-07/

The source article says revenue fell 1%. No clue where the 99% number came from.

 

[londiste]

@Dr. Dro you missed it, it ended at 20.49 yesterday and seems to be going up.

 

[Dr. Dro]

@Dr. Dro you missed it, it ended at 20.49 yesterday and seems to be going up.

That's on NASDAQ, I just got my forex account going with my bank, still a few things to clear out. Brazilian Depositary Receipt papers are basically the same thing but on our local exchange, easier for me for the time being. Will definitely buy once Intel hits rock bottom, suspect it'll be after the trio of litigation hits

 

[Eternit]

Intel has problems, because for years they paid too much dividends and instead of investing in R&D.

 

[londiste]

Intel has problems, because for years they paid too much dividends and instead of investing in R&D.

You mean the billions they spent yearly on R&D just weren't enough? $16B last year, that was a decline from $17.5B the year earlier.

Intel Research and Development Expenses 2010-2024 | INTC

Intel annual/quarterly research and development expenses history and growth rate from 2010 to 2024. Research and development expenses can be defined as an expense arising from studies and product development processes. <ul style='margin-top:10px;'> <li>Intel research and...

www.macrotrends.net

But more seriously, that bleeding edge of technology - especially the problematic part in foundries and manuacturing processes - does not benefit linearly from money poured into it.

 

[Dr. Dro]

Intel has problems, because for years they paid too much dividends and instead of investing in R&D.

Doesn't check out, Intel has one of the highest CapEx rates in the industry, since it's one of the only semiconductor companies that own and develop fabs

 

[Crackong]

It is Okay.
Remember those days when AMD was $3 ?

 

[64K]

No surprise. Lawyers sharks smell blood and are circling. I don't have a crystal ball but I suspect things are going to get much worse for Intel before they get better. They still have the costs of the defective CPUs to contend with and the inevitable class-action suit.

 

[Bwaze]

Ne chance this will go through, it will be dismissed even easier than shareholders suing Nvidia for misleading, hiding, misreporting crypto revenue - "Investors were unable to provide any significant evidence that the company has used such practices and misled investors"...

NVIDIA Wins $1 Billion Lawsuit by a Class of Investors

 

[dont whant to set it"']

"Karens"

 

[Chrispy_]

We've known the foundry has been underperforming since 10nm, but, uh...

99% drop in revenue?
Holy shit.

Oh, it's not 99% at all.

 

[Daven]

Intel pretended they had a lot of innovation coming by releasing a word salad of internal codenames over the years; many that never came to light. They also pretended to have four node advancements in four years which is still unconfirmed as Intel moves more products to TSMC nodes. They also pretended to have large pending IFS customers that never existed.

 

[Wirko]

does not benefit linearly from money poured into it

In this case, the non-linearity may mean that Intel makes worse return on investment than TSMC and Samsung.

 

[Vayra86]

Intel pretended they had a lot of innovation coming by releasing a word salad of internal codenames over the years; many that never came to light. They also pretended to have four node advancements in four years which is still unconfirmed as Intel moves more products to TSMC nodes. They also pretended to have large pending IFS customers that never existed.

They also pretend to have good chips too for two generations on end now.

The Core fairy tale is long overdue for breaking down. Its quite an achievement Intel made it to 14th gen on this quad core-based idea with some tweaks. Yes, yes, they changed a lot. But they never went for that reset that AMD did go through, and it shows in their product line ups, strategy, and the continuously rising power usage. The real story with Intel is that since the 10nm debacle, they've been saving their sinking ship by trying to pump the water out again, installing more pumps every year. The leak's still there though, and Pat's shrinking muscle mass can't keep the hole closed.

 

[Wirko]

They also pretend to have good chips too for two generations on end now.

The Core fairy tale is long overdue for breaking down. Its quite an achievement Intel made it to 14th gen on this quad core-based idea with some tweaks. Yes, yes, they changed a lot. But they never went for that reset that AMD did go through, and it shows in their product line ups, strategy, and the continuously rising power usage. The real story with Intel is that since the 10nm debacle, they've been saving their sinking ship by trying to pump the water out again, installing more pumps every year. The leak's still there though, and Pat's shrinking muscle mass can't keep the hole closed.

At least their E core was very innovative without much legacy, weak at the beginning, but now it seems to be improving fast. I almost expect them to merge the P-minus-HT and E core designs into one superior design in the next couple years... well, if they have enough good engineers (and managers!) left in the stable.

 

[kapone32]

Ne chance this will go through, it will be dismissed even easier than shareholders suing Nvidia for misleading, hiding, misreporting crypto revenue - "Investors were unable to provide any significant evidence that the company has used such practices and misled investors"...

NVIDIA Wins $1 Billion Lawsuit by a Class of Investors

Well they are still under a DOJ investigation and that is a whole different Kettle of Fish. Think Enron.

 

[MaMoo]

Intel will fix this with a microcode update. Investor confidence will be warranted for another 2 years.

 

[Ferrum Master]

Gelsinger will start to quote Bible on X even more.

 

[bonehead123]

"too big to fail" said the ominous wall street sharks, who later learned about the fallacy of those words

If things keep going the way they are now, intel will soon be looking for a gov't bail out, and THEN all will be well..........

yea right !

 

[phanbuey]

This was always going to happen.