A US District Court has refused a shareholder lawsuit against Intel claiming the company had mislead investors about a $7 billion operating loss in its foundry business. The class action, which alleged that Intel’s delayed disclosure led to mass layoffs and a dividend suspension and the destruction of $32 billion of shareholder value in one day, was dismissed by Judge Trina Thompson.
In her opinion, the court held that shareholders had not been able to prove that Intel had misled investors. The court also noted that Intel had not reported actual financial results that were wrong, and that statements made by then CEO Patrick Gelsinger in March 2024 about “growing demand” were not materially misleading. His comments were about particular clients, not overall revenue.
The suit covered the time from January through August N the court’s opinion, the stock was said to have been overvalued. On August 1, the company reported a quarterly loss of $1.61 billion, laid off more than 15,000 people, and froze the dividend in order to cut $10 billion by 2025. The stock then dropped 26%, erasing billions of market value.
Intel still shares the company’s woes in competing against the likes of Nvidia, AMD, Samsung, and TSMC in the new age AI driven semiconductor market. It has named a new CEO in December 2024 because of financial issues. Although Intel did not comment on the ruling, its shareholders may try again with a new complaint.
