Intel will halt dividends to investors as part of a slash and burn program aimed at restoring the tech giant’s fortunes.

The US$121 billion (A$186 billion) company made a series of announcements overnight aimed at quelling anxiety among nervous stockholders.

It announced that its board of directors had declared a miserly quarterly dividend of US$0.125 (A$0.192) per share on the company’s common stock, which will be payable September 1, 2024. Intel’s stock price was down 5.5% on the day’s trade, at US$29.05 (A$44.70) per share at the close.

Intel will suspend dividends starting in the fourth quarter of 2024. “The company reiterates its long-term commitment to a competitive dividend as cash flows improve to sustainably higher levels,” Intel said.

Screenshot of Intel financial results.

In a statement that hit the key buzzwords, Pat Gelsinger, Intel CEO, described the second quarter financial performance as “disappointing, even as we hit key product and process technology milestones”.

“Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation,” said Gelsinger.

He said the launch of Intel 18A next year will “regain process technology leadership …  strengthen our position in the market, improve our profitability and create shareholder value”.

In a note to staff, Gelsinger said: “This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history.”

David Zinsner, Intel Executive Vice President and Chief Financial Officer. Image: Intel.

Intel CFO David Zinsner said: “By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet. We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders.”

There was more talk about a “sustainable engine of process technology leadership”, “a sustainable financial engine”, “operational agility” and “manufacturing leadership”, but for Intel workers today that will mean little.

After establishing separate financial reporting for Intel Products and Intel Foundry, Intel said it had a “clean sheet view of the business” and found “significant opportunities to drive meaningful operational and cost efficiencies”.

The actions include structural and operating “realignment” across the company, headcount reductions, and operating expense and capital expenditure reductions of more than US$10 billion (A$15.4 billion) in 2025 compared to previous estimates. 

Intel said it would cut spending in R&D and marketing, and that the company expected to reduce headcount by more than 15%, with the majority of those staff getting their marching orders by the end of 2024.

According to Statista, Intel had around 132,0900 employees worldwide in 2022. It is now at about 125,000. A 15% cut would see that number drop by around 19,000 to 106,000.   

You can read the letter sent to Intel staff by Pat Gelsinger here.