Intel Slashes Dividend by 65 Percent as It Pushes to Cut Costs After Big Loss

Intel CEO Pat Gelsinger speaks during a panel session of the World Economic Forum (WEF) in Davos, Switzerland, on May 25, 2022. (Hollie Adams/Bloomberg via Getty Images)

Intel Corp. slashed its quarterly dividend by almost two-thirds, as it proceeds to cut costs after major losses.

The U.S.-based chip manufacturer will reduce its fourth quarterly dividend from $0.365 to $0.125, a loss of more than 65 percent, the chipmaker announced on Feb. 22.

This comes after the company announced the implementation of a series of wide-ranging cost cuts earlier this month.

Intel executives plan to take pay cuts after the chipmaker reported weak fourth-quarter numbers that caused company’s share price to tumble.

The firm’s latest results saw a $664 million net loss for the fourth quarter of 2022, after failing to meet estimates because of a steeper than expected falloff in PC chip sales.

Intel’s fourth-quarter loss was the chipmaker’s largest since 2017.

Intel’s Market Share Falls Post-Pandemic

After a boom during the pandemic, the PC market has fallen at its most rapid pace since the 1990s, say analysts.

Intel CEO Pat Gelsinger recently told analysts on a call that the company’s board would take a cautious stance regarding their first dividend cut since 2000, CNBC reported.

He said that the tech firm plans on resuming growing the dividend “over time.”

“The board and I continue to view the dividend as a critical component to the overall attractiveness of Intel,” Gelsinger added, while also stating that Intel’s board remained committed to maintaining a competitive yield.

Intel’s quarterly dividend will be payable on June 1 to shareholders of record on May 7.

The dividend yield is now 1.9 percent, as of closing on Feb. 21, down significantly from its prior yield of 5.6 percent, reported CNBC.

“Prudent allocation of our owners’ capital is important to enable our IDM 2.0 strategy and sustain our momentum as we rebuild our execution engine,” Gelsinger said in a press release.

The company also reaffirmed its latest business outlook for the first quarter of 2023, expecting revenue of between $10.5 billion and $11.5 billion, with a gross margin of 34.1 percent on a GAAP basis.

Intel guided earnings per share to a loss of $0.15 on a non-GAAP basis, but the report did not provide full-year guidance, citing economic uncertainty.

US Chipmaker Plans Major Cutbacks

“We are well on our way to meeting our commitment to reduce $3 billion in costs this year as we look to deliver $8–10 billion in savings exiting 2025,” said Intel CEO David Zinsner.

“While we will continue to prudently manage cash and capital outlays in the near term, we are setting the foundation for significant operating leverage and free cash-flow growth when we emerge from this period of outsized investments.”

The company has previously taken steps to reduce headcount and other operating expenses, including compensation cuts.

Intel has also exited of seven non-core businesses since early 2021, as the company attempts to sharpen its focus and improve its operating structure. ​

The chipmaker’s stock price has fallen nearly 60 percent from its 2021 high, as it faces a declining PC market, a glut in chip inventory, and underutilized factories.

Intel shares fell 2.26 percent, to $25.27, at the close on Feb. 22, after the news.