“We are laying the groundwork for significant operating leverage and free cash flow growth,” said chief financial officer David Zinsner.
Intel (INTC) – Get a free reportShares fell on Wednesday after the struggling chipmaker cut its quarterly dividend as it moves to preserve capital while boosting its near-term investment plans following its disappointing 2023 earnings outlook.
Intel said it will pay a quarterly dividend of 12.5 cents per share, down from its previous payment of 36.5 cents, payable June 1 to shareholders of record May 7, as it looks to fulfill its $8 promise. billion to $10 billion in cost cuts over the next two years amid what he called a “transformation during this period of macroeconomic uncertainty.”
The group also said it will “temporarily” cut executive and board salaries, as well as employee rewards programs.
The moves follow weaker-than-expected fourth-quarter earnings from Intel in late January, which showed an adjusted bottom result of 10 cents a share, about half of Street’s forecasts, on revenue of $14 billion. .
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“The prudent allocation of our owners’ capital is important to enabling our IDM 2.0 strategy and maintaining our momentum as we rebuild our execution engine,” said CEO Pat Gelsinger.
Intel shares were marked 1% lower in premarket trading to indicate an opening bell price of $25.90 each.
Intel confirmed its recent forecasts, which see revenue slowing to $10.5-11.5 billion during the current quarter and gross margins shrinking to around 34.1%, nearly half the manufacturer’s long-term target. of chips around 60%.
With weak PC demand expected to last well into the first half of the year, and data center customers to backtrack on their spending plans amid broader macroeconomic uncertainty, Intel expects a 15-cent loss. per share in the March quarter.
“We are on track to meet our commitment to reduce $3 billion in costs this year as we look to deliver $8 to $10 billion in savings out of 2025,” said CEO David Zinsner. “While we will continue to prudently manage cash and expended capital in the near term, we are laying the groundwork for significant operating leverage and free cash flow growth as we emerge from this period of outsized investments.”
