Intel Corp. shares suffered their largest decline in over 40 years after the company gave a grim growth forecast and laid out plans to slash 15,000 jobs, signaling that the chipmaker is ill-equipped to compete in the artificial intelligence era.
The shares fell more than 26% after trading opened in New York on Friday, wiping out about $32 billion in market value. This marks the stock’s biggest biggest intraday drop since since at least 1982, according to data compiled by Bloomberg.
Sales for the current quarter will be $12.5 billion to $13.5 billion, the company said Thursday.
Intel said it plans to cut more than 15% of its workforce of around 110,000 people. It’s also suspending dividend payments to shareholders starting in the fourth quarter, and will continue that until “cash flows improve to sustainably higher levels,” according to the statement. The company has paid a dividend since 1992.
“I have no illusions that the path in front of us will be easy,” Chief Executive Officer Pat Gelsinger said in a memo to employees. “You shouldn’t either.” He called the moves “some of the most consequential changes in our company’s history.”
In the second quarter, the company had a profit of 2 cents a share, excluding certain items, and revenue of $12.8 billion, down 1%.
Analysts had estimated a profit of 10 cents a share and sales of $12.95 billion. Wall Street is projecting a modest increase in overall sales this year from 2024, still leaving the company more than $20 billion below its peak in 2021.
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