Intel Corporation is embroiled in a class-action lawsuit filed by shareholders after the company's stock suffered a dramatic 26% decline, wiping out over $32 billion in market value.
The lawsuit, filed in the U.S. District Court for Northern California, accuses Intel, along with its CEO Patrick Gelsinger and CFO David Zinsner, of concealing critical issues within its foundry business—a division responsible for manufacturing chips for external clients.
Shareholders claim that Intel made materially false or misleading statements about its manufacturing capabilities and business prospects, which artificially inflated the stock price from January 25 to August 1, 2024.
The alleged deception became apparent when Intel revealed that its foundry business was struggling, leading to disappointing financial results, including a $1.61 billion net loss for the second quarter and a 1% revenue decline to $12.83 billion.
In response to these challenges, Intel announced plans to lay off more than 15% of its workforce—over 15,000 employees—and suspend its dividend starting in the fourth quarter of 2024 as part of a broader restructuring strategy aimed at saving $10 billion by 2025.
These measures were intended to help the company navigate intense competition from rivals like AMD, Nvidia, Samsung, and Taiwan's TSMC, and capitalize on the growing demand for artificial intelligence.
Despite these efforts, Intel's stock continued to decline, closing at $18.99 on Wednesday, representing a 34.6% drop since the August 1 announcement.
The shareholders' lawsuit seeks to hold Intel accountable for the financial damages incurred due to the company's alleged mismanagement and lack of transparency.
The lawsuit, filed in the U.S. District Court for Northern California, accuses Intel, along with its CEO Patrick Gelsinger and CFO David Zinsner, of concealing critical issues within its foundry business—a division responsible for manufacturing chips for external clients.
Shareholders claim that Intel made materially false or misleading statements about its manufacturing capabilities and business prospects, which artificially inflated the stock price from January 25 to August 1, 2024.
The alleged deception became apparent when Intel revealed that its foundry business was struggling, leading to disappointing financial results, including a $1.61 billion net loss for the second quarter and a 1% revenue decline to $12.83 billion.
In response to these challenges, Intel announced plans to lay off more than 15% of its workforce—over 15,000 employees—and suspend its dividend starting in the fourth quarter of 2024 as part of a broader restructuring strategy aimed at saving $10 billion by 2025.
These measures were intended to help the company navigate intense competition from rivals like AMD, Nvidia, Samsung, and Taiwan's TSMC, and capitalize on the growing demand for artificial intelligence.
Despite these efforts, Intel's stock continued to decline, closing at $18.99 on Wednesday, representing a 34.6% drop since the August 1 announcement.
The shareholders' lawsuit seeks to hold Intel accountable for the financial damages incurred due to the company's alleged mismanagement and lack of transparency.