Intel stock

2024 - 8 - 1

Intel's Shocking Move: 15% Layoffs and Dividend Suspension Rock Wall Street!

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Goodbye dividends, hello layoffs! Intel's drastic measures shake up the stock market.

Wall Street was left in shock as Intel announced a drastic measure to lay off 15% of its workforce, translating to around 15,000 jobs. The tech giant also revealed plans to suspend its dividend starting from the fourth quarter and slash capital expenditures. This aggressive move is part of a $10 billion cost-cutting program aimed at steering the company back to profitability. The news sent Intel's stock plunging by more than 10% on the same day the announcement was made.

It wasn't just the layoffs and dividend suspension that worried investors. Intel also reported a significant miss in its second-quarter earnings, with revenue dipping to $12.8 billion—down 1% year over year. The company's GAAP earnings showed a loss of $0.38 per share, much worse than analysts' expectations. Intel's CEO, Pat Gelsinger, didn't shy away from the grim outlook, candidly stating that the company had to take severe actions to stay afloat amid fierce competition and escalating costs.

Adding to Intel's woes, analysts had expected much stronger quarterly results, with a forecast of 31 cents a share on sales of $14.43 billion for the third quarter, whereas the company earned only 41 cents in the year-earlier period. The weak financials have led to growing concerns about Intel's ability to keep up with competitors like Nvidia, who are currently leading the AI race and capitalizing on the tech boom.

One of the driving factors behind Intel's cost-cutting includes a reevaluation of its investments in artificial intelligence. While AI has opened new revenue streams for many tech companies, Intel's overspending in this area has raised eyebrows. As a result, the company aims to recalibrate its focus and ensure that spending aligns more closely with achievable returns.

As Intel plans to execute its turnaround strategy, many are left wondering about the potential long-term impacts on the tech industry's workforce. Will this be a harbinger of more layoffs in tech, or can Intel successfully navigate through these turbulent times?

In the meantime, here's something you might find fascinating: Despite its current struggles, Intel remains one of the oldest chip manufacturers in the world, having been founded in 1968. Also, did you know that the company was one of the pioneers in creating the first commercially available microprocessor? Even in challenging times, Intel's contribution to the tech world remains undeniably significant.

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