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Intel faced its most severe stock drop in 50 years on Friday, reaching levels not seen since 2013, following a major earnings miss and a significant restructuring announcement.
Key Financial Figures:
- Share Price Drop: 26%, closing at $21.48.
- Net Loss: $1.61 billion, compared to net income of $1.48 billion a year earlier.
- Adjusted Earnings Per Share: 2 cents, falling short of the 10 cents expected by analysts.
- Revenue: Missed expectations.
Restructuring and Cost-Cutting Measures:
- Dividend: Intel announced it will not pay its dividend for the fiscal fourth quarter of 2024.
- Capital Expenditures: Forecast lowered by over 20% for the full year.
- Job Cuts: More than 15% of employees to be laid off as part of a $10 billion cost-reduction plan.
Company Response: Intel CEO Pat Gelsinger described the restructuring as “the most substantial since the memory microprocessor transition four decades ago,” aiming to revitalize the company and compete more effectively, especially in AI and PC chip markets.
Impact on the Sector:
- Market Reaction: The selloff impacted global semiconductor stocks, with TSMC and Samsung also seeing declines of 4.6% and over 4%, respectively.
- Sector ETF: The VanEck Semiconductor ETF fell 5.5% following a 6.5% drop the previous day.
Nvidia’s Antitrust Investigation:
- Report: Nvidia is reportedly under investigation by the U.S. Department of Justice for possible antitrust violations related to its AI chip market dominance.
- Nvidia’s Response: The company stated it “competes based on merit” and is open to providing information to regulators.
Other Affected Companies:
- SK Hynix: Fell more than 10%.
- ASML, STMicroelectronics, Infineon: Shares declined in Europe.
Intel’s significant restructuring and the broader market impact reflect ongoing challenges and shifts within the semiconductor industry.