Intel Slashes Dividend Following Grim Profit Outlook: Stock Slides
"We are setting the foundation for significant operating leverage and free cash flow growth," said CFO David Zinsner.
"We are setting the foundation for significant operating leverage and free cash flow growth," said CFO David Zinsner.
Intel (INTC) - Get Free Report shares moved lower Wednesday after the struggling chipmaker cut its quarterly dividend as it moves to preserve capital while driving its near-term investment plans following its disappointing 2023 profit outlook.
Intel said it will pay a quarterly dividend of 12.5 cents per share, down from its previous payout of 36.5 cents, payable on June 1 to stockholders of record on May 7, as it looks to deliver on its promise of $8 billion to $10 billion in cost cuts over the next two years amid what it called a "transformation during this period of macroeconomic uncertainty".
The group also said it will "temporarily" reduce executive and board pay as well employee rewards programs.
The moves follow Intel's weaker-than-expected fourth quarter earnings in late January, which showed an adjusted bottom line of 10 cents per share, around half of Street forecasts, on revenues of $14 billion.
“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,” said CEO Pat Gelsinger.
Intel shares were marked 1% lower in pre-market trading to indicate an opening bell price of $25.90 each.
Intel confirmed its recent forecasts, which sees revenues slowing to between $10.5 and $11.5 billion over the current quarter and gross margins narrowing to around 34.1%, nearly half of the chipmaker's long-term target of around 60%.
With weak PC demand expected to last well into the first half of the year, and data center clients pulling back on spending plans amid broader macro uncertainty, Intel expects a March quarter loss of 15 cents per share.
“We are well on our way to meeting our commitment to reduce $3 billion in costs this year as we look to deliver $8 to $10 billion in savings exiting 2025," said 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."
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