Intel was sued on Wednesday by shareholders who said the Silicon Valley chipmaker fraudulently concealed problems that led it to post weak results, slash jobs and suspend its dividend, and caused its market value to sink more than $32 billion (roughly Rs. 2,68,732 crore) in a single day.
The proposed class action against Intel, Chief Executive Patrick Gelsinger and Chief Financial Officer David Zinsner was filed in San Francisco federal court.
Shareholders said they were blindsided when Intel revealed on August 1 that its so-called foundry business for making chips on contract for outsiders was in their words “floundering,” costing billions of dollars extra even as revenue declined.
They said the Santa Clara, California-based company’s materially false or misleading statements regarding the business and its manufacturing capabilities inflated its stock price from January 25 to August 1.
Intel had no immediate comment.
The lawsuit came after Intel said last Thursday it would lay off more than 15 percent of its workforce, or more than 15,000 jobs, and suspend its dividend starting in the fourth quarter as part of a restructuring meant to save $10 billion (roughly Rs. 83,976 crore) in 2025.
Intel also posted a $1.61 billion (roughly Rs. 13,520 crore) second-quarter net loss, as revenue fell one percent to $12.83 billion (roughly Rs. 1,07,742 crore).
The company has struggled to fend off competition from rival chipmakers and benefit from growth in artificial intelligence.
Among its rivals are Advanced Micro Devices, Nvidia, Samsung Electronics and Taiwan’s TSMC.
Intel’s share price tumbled 26 percent to $21.48 (roughly Rs. 1,803) on August 2, the day after it announced quarterly results, the job cuts and the dividend suspension.
The shares closed Wednesday down 3.6 percent at $18.99 (roughly Rs. 1,594) and have fallen 34.6 percent since the announcement.
The case is Construction Laborers Pension Trust of Greater St. Louis v Intel Corp, US District Court, Northern District of California, No. 24-04807.
© Thomson Reuters 2024
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