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To: Johnny Canuck who wrote (59554)	8/2/2024 1:31:22 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69805

Why Intel is suspending its dividend — as stock heads for worst drop since 2000Intel will also cut 15% of its staff: ‘We’ve yet to fully benefit from powerful trends, like AI’ By Emily Bary Follow Last Updated: Aug. 1, 2024 at 8:31?p.m. ET First Published: Aug. 1, 2024 at 4:13?p.m. ET 25 Listen (4 min) Intel logged a net loss of $1.6 billion in the second quarter.PHOTO: INTEL Referenced Symbols INTC -5.50% This update corrects the revenue estimate for Intel’s second quarter. Intel Corp. Chief Executive Pat Gelsinger put it bluntly as he announced a $10 billion cost-cutting program that will decrease capital expenditures and bring a 15% headcount reduction. “Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” he said in a memo posted to Intel’s INTC -5.50% website Thursday. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI.” Intel will also be suspending its dividend beginning in the fourth quarter. “The company reiterates its long-term commitment to a competitive dividend as cash flows improve to sustainably higher levels,” Intel said in its earnings release. The stock had a 1.72% implied dividend yield prior to the report. NOW PLAYING: Mackey: Trader Joe's Went to the East Coast Because of Whole Foods The video player is currently playing an ad. Visit our Video Center Those announcements came alongside the chip company’s second-quarter earnings report, which brought a miss on adjusted profit and downbeat guidance. The stock plunged 19% in Thursday’s extended session following the earnings call. A decline of that magnitude, were it to hold through the regular session Friday, would be Intel’s worst since the stock fell 22.0% on Sept. 22, 2000. Read: As Arm’s stock slides, these analysts say to keep the faith Intel logged a net loss of $1.6 billion, or 38 cents a share, after recording net income of $1.5 billion, or 35 cents a share, in the year-earlier period. On an adjusted basis, Intel earned 2 cents a share, while analysts had been modeling 10 cents a share. Revenue amounted to $12.83 billion, which compared with $12.95 billion in the year-prior quarter. The FactSet consensus was for $12.92 billion. We Make The Markets Make Sense Understand how today’s global business practices, market dynamics, economic policies and more impact you with real-time news and analysis from MarketWatch. SUBSCRIBE NOW: 50¢ PER WEEK Gelsinger touched on disappointing revenue trends in his memo. Intel’s “annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10% larger now than it was then,” he wrote. “There are a lot of reasons for this, but it’s not a sustainable path forward.” Intel plans to see $25 billion to $27 billion in gross capital expenditures this year, more than 20% below its original target for the year. The new forecast “additionally reflects expectations for softer second-half demand,” Gelsinger said on the earnings call. For the third quarter, Intel models $12.5 billion to $13.5 billion in revenue. The FactSet consensus had called for $14.4 billion. Intel’s outlook on earnings per share is for a 3-cent loss, while analysts were looking for 31 cents in adjusted EPS. “Weaker spending across consumer and enterprise markets, especially in China, and continued focus on AI server investments in the cloud have reduced our [total addressable market] expectations for 2024,’ Chief Financial Officer David Zinsner said on the call. “As a result, customer inventory levels are elevated.” The company expects a 38% adjusted gross margin in the third quarter. The top-line pressure is weighing on margins and earnings, according to Zinsner. “We are taking aggressive actions to significantly reduce spending in response,” he said. “These actions, while difficult, will help streamline the organization to improve productivity and make better decisions more quickly.” Don’t miss: AMD’s earnings quelled fears, but a big debate rages on