Intel slashes dividend by 66% after earlier salary cuts, layoffs and disastrous 4Q

Intel slashed its quarterly dividend by 66% to 12.5 cents a share just three weeks after announcing pay cuts, preceded by a disastrous fourth quarter earnings report indicating a 32% year-on-year revenue nosedive.

The Intel board decided to reduce the dividend, effective in June, to “best position the company to create long-term value,” the company said in a statement early Wednesday. “The improved financial flexibility will support the critical investments needed to execute Intel’s transformation during this period of macroeconomic uncertainty.”

CEO Pat Gelsinger said the other first quarter forecasts recently announced will stay in place, including revenues of up to $11.5 billion.  He explained the dividend reduction as a “prudent” move to help Intel continue on its foundry strategy and to “sustain our momentum as we rebuild our execution engine.”

“We’ve always described our turnaround as a multiyear journey,” Gelsinger told analysts on an early morning call.

He noted the company had earlier announced cost savings of $3 billion in 2023 on a pathway to $8 billion to $10 billion in annual savings by the end of 2025. Those savings are partly through a reduction in worker headcount and temporary reductions in compensation affecting many employees and executives and, now, members of the board.

Asked the company’s intentions about layoffs, Gelsinger said Intel is in “the talent business” and had added engineers in recent years to meet long-term transformational requirements. Part of the recent layoffs of more than 500 workers and compensation reductions were a result of macroeconomic conditions affecting the entire chip industry, he said.

“We expect that [trend] to be temporary and [will] restore to more normal levels,” he said. “People are part of this team because they believe in the vision and mission. This is a critical technology company.”

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