- Intel has witnessed a 60% drop in its market value in the past year.
- Intel has cut its dividend payout to the lowest in 16 years.
- The company has held back on major capex investments and cut the salaries of its employees to navigate through a weak demand market.
Intel cut its quarterly dividend by more than 65%, from $0.365 to $0.125. This is the semiconductor giant’s lowest dividend payout in 16 years as the company has gone on an aggressive cost-cutting spree amid a demand slump in the PC and smartphone market.
On a call with analysts, Intel CEO Pat Gelsinger said that the company intended to resume growing the dividend “over time.”
“As the macro conditions continued to deteriorate in Q4 our free cash flow fell below our guard bands and in this environment, we just came to the conclusion that the highest dividend payer shouldn’t also be the highest capital investor,” he told analysts.
Based on Tuesday’s closing price, the Wall Street stock’s dividend yield is now 1.9%, down significantly from its prior yield of 5.6%.
Gelsinger added that Intel would hold back on major investments worth tens of billions of dollars on new manufacturing equipment and facilities as it grows its foundry business.
“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 company said in a release. “The improved financial flexibility will support the critical investments needed to execute Intel’s transformation during this period of macroeconomic uncertainty.”
Intel reaffirmed its outlook for the first quarter of 2023, which calls for $10.5 billion to $11.5 billion in revenue and a 15-cent adjusted loss per share.
Earlier this month, Intel announced that it would slash the salaries of its executives and employees after the chipmaker forecast one of the worst quarters in 50 years of its business. Intel’s stock has fallen nearly 60% from its 2021 high as the company struggles to veer its way through a challenging PC market, a surplus of chips and underutilised factories.