Jakarta, CNBC Indonesia – Shares of chipmaker Intel (INTC.O) fell 26.06% to US$21.48 per share in the last trading week, Friday (2/8/2024). This position is the lowest since April 8, 2013 or more than 11 years.
The weakening of 26.06% per day was also the deepest since 1974 (31% per day) or more than 50 years or fifty years. The drop in Intel’s shares saw its market cap drop below $100 billion.
Intel shares fell sharply after news of layoffs (PHK) by the technology company founded in 1968. Intel also said it would not distribute dividends from profits for the 2024 financial year.
According to Reuters, this step was taken as part of efforts to restore the lost manufacturing industry. Intel also forecast third quarter revenue below expectations.
The decline in performance is due to the chipmaker seeing a decline in spending on traditional data center semiconductors and focusing more on AI chips, where Intel is lagging behind its competitors.
The layoffs will affect approximately 17,500 people. Intel, which employed 116,500 people as of June 29, said most of the layoffs would be completed by the end of 2024.
The company also announced that it will cut operating costs and reduce capital expenditures by more than $10 billion by 2025, more than expected.
“The $10 billion cost reduction plan shows that management is willing to take strong and drastic measures to fix the problem. But we’re all asking, ‘is this enough’ and is this an afterthought because CEO Gelsinger has been at the helm for more than three years?” said Michael Schulman, chief investment officer at Running Point Capital.
He also said that eliminating the dividend would likely put more pressure on the stock in the short to medium term, as it would exclude Intel from ETFs, indexes and mutual fund strategies that direct coverage of dividend payers.
As of June 29, Intel had cash and cash equivalents of $11.29 billion, and total current liabilities of about $32 billion. Much attention from Wall Street has focused on the large investments and high costs incurred by Intel in its efforts to build manufacturing capacity to compete with Taiwanese chip-making giant TSMC.
As part of its cost reduction plan, Intel plans to reduce capital expenditures by 17% in 2025 to $21.5 billion. They believe that these costs will remain stable in 2024.
(mkh/mkh)
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