Following the announcement of job and dividend cuts, Intel shareholders sued the company for misrepresented financial health and operations leading to market value downfall.
On Wednesday, in San Francisco federal court, Intel shareholders initiated a class action lawsuit against the American semiconductor company, along with CEO Patrick Gelsinger and CFO David Zinsner.
The lawsuit accuses Intel of misrepresenting its financial health and foundry operations, contributing to a $32 billion drop in market value in a single day. It claims that misleading statements from January to August 2024 inflated Intel’s stock price, causing significant financial losses for investors.
This action followed Intel’s announcement last week that it would cut over 15% of its workforce, equating to more than 15,000 jobs, and suspend its dividend starting in the fourth quarter. This restructuring aims to save $10 billion by 2025.
Additionally, Intel reported a net loss of $1.61 billion for the second quarter, with revenue dropping 1% to $12.83 billion, alongside a 26% decline in share price
Shareholders claimed they were caught off guard by Intel’s announcement on August 1, revealing that its contract foundry was underperforming. According to Reuters, this unexpected issue, coupled with a 99% decline in revenue for Q2 2024, contributed to the semiconductor company’s substantial net loss.
The case is formally titled ‘Construction Laborers Pension Trust of Greater St. Louis v Intel Corp’ and is being heard in the U.S. District Court for the Northern District of California.
Intel is also dealing with a patent dispute with R2 Semiconductor across Europe. Having won in the U.K., it faces ongoing appeals in Germany and pending cases in France and Italy. Additionally, a class action lawsuit is under investigation for instability issues with its 13th- and 14th-gen chips.
Furthermore, the chipmaker is lagging behind competitors like AMD, Nvidia, TSMC, and Samsung in AI and next-gen processors. Despite hopes for the Lunar Lake launch, instability with its 13th- and 14th-gen chips could cede market share and the x86 crown to AMD.
