Proactive Investors - Intel Corporation (NASDAQ:INTC) is cutting its quarterly dividend by more than 65%, the chipmaker announced, as it looks to step up investment amid with fierce competition.
The dividend was slashed to US$0.125 from $0.365 in what was the first cut since 2000 for the company and just days after it announced broad cost-cutting measures, including a 25% cut to CEO Pat Gelsinger’s base salary and other executive pay package reductions.
In a call with analysts, Gelsinger said the company is focused on maintaining a competitive yield, according to reports. The CEO is two years into a five-year “turnaround assignment” aimed at restoring Intel’s technological leadership in the $580 billion chip industry.
“The improved financial flexibility will support the critical investments needed to execute Intel’s transformation during this period of macroeconomic uncertainty,” the company said in a statement.
Intel’s dividend yield is currently at 1.9% based on a Tuesday closing price of $26.06. That’s well below the company’s prior yield of 5.6%. The dividend will be payable on June 1.
The company also reiterated its first-quarter guidance of a $0.15 adjusted per share loss, but zooming out there are plenty of dark clouds.
Intel’s shares are down 60% from their 2021 high, as a struggling PC market, increasingly stiff competition and dwindling financial results have left their mark on the stock.
Part of that stems from Intel’s declining market share at the hands of Advanced Micro Devices (NASDAQ:AMD) Inc and others that have embraced semiconductors based on technology from British chip-design specialist ARM Holdings (LON:ARM).
Another factor, according to management, is that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new ones.
Intel shares traded 0.3% lower at $25.97 Wednesday morning in New York.