Intel CEO Pat Gelsinger said on a call with analysts that the company’s board was cautious in weighing the first dividend cut since 2000. He added Intel intended to resume growing the dividend “over time.”
“The board and I continue to view the dividend as a critical component to the overall attractiveness of Intel,” he added.
Intel shares were largely flat at Wednesday’s open after the news.
Gelsinger insisted on the call that both he and the board remained committed to maintaining a competitive yield. Intel’s dividend yield is now 1.9%, based on Tuesday’s closing price, down significantly from its prior yield of 5.6%.
The dividend will be payable on June 1. “Prudent allocation of our owners’ capital is important to enable our IDM 2.0 strategy and sustain our momentum as we rebuild our execution engine,” Gelsinger said in a press release.
The company also reaffirmed its recently issued outlook for the first quarter of 2023. Intel guided to a 15 cent non-GAAP loss per share but didn’t provide full-year guidance, citing economic uncertainty.
Intel’s most recent results, a top- and bottom-line miss and a $664 million net loss for the fourth quarter of 2022, sent its share price sharply down. “No words can portray or explain the historic collapse of Intel,” Rosenblatt analyst Hans Mosesmann wrote after the earnings report.
Few other large-cap companies have made such sizable cuts in recent memory. Asset manager Blackstone took its dividend from $1.27 to $0.90 in Oct. 2022, and telecom giant AT&T slashed its dividend nearly in half in early 2022.
Other firms have cut dividends in recent weeks. Rio Tinto, one of the largest mining concerns in the world, slashed its dividend Wednesday. BHP, another mining firm, announced a $0.90 dividend on Monday, down 40% year-over-year.
In the apparel space, HanesBrands eliminated its dividend wholesale earlier this month, while VF Corp, which counts North Face and Jansport as subsidiary brands, cut its dividend by over 40% earlier this month.
Intel’s stock has fallen nearly 60% from its 2021 high, a reflection of both a challenging PC market and of company-specific issues, including a surplus of chips and underutilized factories.
The company said it aimed to deliver $3 billion in cost savings this year, in part through compensation cuts. Intel’s fourth-quarter loss was the chipmaker’s largest since 2017.
— CNBC’s Robert Hum, Michael Bloom, Jordan Novet and Kif Leswing contributed to this report.