The stock of Intel (INTC) is down 22% after the microchip company announced that it is suspending its quarterly dividend payment following weak second-quarter financial results.
Intel said it will stop paying its quarterly dividend payment in this year’s fourth quarter.
The company had been paying shareholders a dividend of $0.12 U.S. per share each quarter, giving the stock a yield of 1.72%.
However, Intel had previously cut its distribution to shareholders by 65% in February 2023 as the company sought to lower expenses and conserve cash.
The company did not provide a timeline for when the quarterly dividend might be reinstated.
News of the dividend suspension comes along with other cost control measures that were announced alongside Q2 financial results that missed Wall Street targets across the board.
The Silicon Valley-based maker of microchips and processors reported earnings per share (EPS) of $0.02 U.S., which was well below the $0.10 U.S. expected among analysts.
Revenue amounted to $12.83 billion U.S. compared to $12.94 billion U.S. that was the consensus forecast across Wall Street. Sales were down 1% from a year earlier.
Management announced that they are eliminating 15% of Intel’s global workforce, equal to about 17,500 positions, as they try and lower costs and improve the company’s finances.
In all, Intel’s executive team said they are looking to reduce costs by as much as $10 billion U.S.
The company is undergoing an expensive transition to become a foundry that produces microchips and processors, not only for itself but for competing companies as well.
Additionally, a decision to more rapidly produce Core Ultra PC chips that can handle artificial intelligence (A.I.) workloads hurt Intel’s Q2 results, said the company.
In terms of guidance, Intel said that it expects a loss of $0.03 U.S. per share on $12.5 billion U.S. to $13.5 billion U.S. in revenue in the current quarter.
Wall Street had been looking for earnings of $0.31 U.S. per share on sales of $14.35 billion U.S.
Prior to today (Aug. 2), Intel’s stock had declined nearly 40% this year and was trading at $29.05 U.S. per share.
