Intel’s crisis continues in various forms, and is now also being blamed by its own investors: some of these have launched a class-action lawsuit against the company, guilty of having hidden the technical problems of some processors that led to the subsequent chaos, resulting in weak financial numbers and the suspension of dividends.
At the moment it is a small group, the Construction Laborers Pension Trust of Greater St. Louis, a Missouri pension fund, but it is proving to be quite combative towards Intel. It is a shareholder of the group, and recently filed a class-action lawsuit in federal court in San Francisco.
In it, the Trust names Chief Executive Officer Pat Gelsinger and Chief Financial Officer David Zinsner as key recipients, reporting that Intel’s withholding of information from investors led to poor results, mass layoffs, a dividend suspension, and a $32 billion market cap collapse.
Domestic production as responsible for the collapse
According to the document, Intel reportedly told investors that designing and manufacturing chips in its own factories would save it between $8 billion and $10 billion by the end of 2025.
Promotional graphics of an Intel CPU
However, the situation is turning out to be quite different.
“Unbeknownst to investors, however, Intel’s manufacturing business was tanking, costing billions of dollars more than shareholders had been led to believe, while revenue growth turned to decline.”
Intel recently reported revenue of $12.83 billion for its fiscal second quarter, down 1% from a year earlier and missing analysts’ forecast of $12.94 billion. Its shares fell 26% in a single day, marking their worst single-day performance since 2013 and even since 1974.
The class-action lawsuit specifically points to the decision to move production in-house, within a construction model that has not lived up to expectations and which would have been responsible for the 62% decline in the share price recorded in the last six months.
Intel has recently been embroiled in a scandal over faulty 13th and 14th Gen CPUs that can cause permanent damage to some PCs. It has also postponed Intel Innovation 2024.
