That's a reason to sue that only a class-action securities attorney could love. Far more honest, but much less likely to prevail, is the last fifteen years of mismanagement including the $100 billion of stock buy-backs, every single dollar of which is now underwater.
Of course the '33 Act is all about disclosure so you take what the law gives you.
First up, the headliner from Reuters, August 7:
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 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 Aug. 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 Jan. 25 to Aug. 1.Intel had no immediate comment....
Zinger Key Points
- Intel announces plans to slash jobs in an effort to drive cost savings across its business.
- Intel's highest salary offer in 2022 was around $263,000, well below some of the offers from other tech players....
....MUCH MORE
My Little Crony: Intel, The Buyback Scam And $19.5 Billion From The Chips Act (INTC)
First up, some background on how Intel lost its mojo.
Stock buybacks by the issuing corporations were illegal in the United States until 1982 when the SEC decided, despite the practice being a form of stock manipulation—artificially boosting a company's share price above what it would otherwise be—and a straight-up tax dodge—lifting the share price results in capital gains which are taxed at much lower rates than the ordinary income that a cash dividend is subject to—when the SEC decided to implement rule 10b-18 (17 CFR § 240.10b-18 - Purchases of certain equity securities by the issuer and others.)
For a company's upper management stock buybacks have the added benefit of dramatically lifting the value of stock-based compensation, to the point that cash and perks are now looked at as merely spending-money while the real wealth-builders are the stock grants and options to purchase same.
I'll skip the discussion of how the differential between ordinary income and capital gains tax rates no longer achieve their stated purpose—capital investment and job creation—and go straight to one of the best academic researchers in this area of the finance business, coincidentally using Intel corporation as one of his examples. From February 2023's "Why Biden’s 4% buyback tax could boost stock prices and dividends":
....William Lazonick, Professor Emeritus of Economics at UMass has done some very interesting work on the interplay of resource mis-allocation (those cash flows) with declining innovation and financialization/value extraction versus value creation in tech industries. His book, "Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States", although going on fifteen years old is still pertinent. Here's an example.
In June 2021 we linked to a New York Times article in "How the World Ran Out of Everything" which, among much else had these three little throwaway lines:
....Still, the shortages raise questions about whether some companies have been too aggressive in harvesting savings by slashing inventory, leaving them unprepared for whatever trouble inevitably emerges.
“It’s the investments that they don’t make,” said William Lazonick, an economist at the University of Massachusetts.
Intel, the American chip-maker, has outlined plans to spend $20 billion to erect new plants in Arizona. But that is less than the $26 billion that Intel spent on share buybacks in 2018 and 2019 — money the company could have used to expand capacity, Mr. Lazonick said.....
Twenty months later we read at Barron's:
Intel’s Quarter Was Brutal. There’s Still No Bottom In Sight.
“The magnitude of the deterioration is stunning," one Wall Street analyst wrote on Friday. There's no easy fix in store for the chip maker.
In total Intel has bought back $110 billion of their own stock, treating what was once one of the crown jewels of American technology as just another corpus to asset-strip, like some private-equity-owned packaged food company with maybe a dividend recap down the road before the equivalent of a bankruptcy bust-out.
So Intel, having spent all their money buying back stock, and their CEO saying Nvidia just got lucky—December 2023: "Intel CEO: Nvidia Got 'Extraordinarily Lucky' in Dominating the AI Market" (NVDA; INTC), lobbied for the CHIPS Act and yesterday we read, from the White House:
Funding catalyzes $100 billion in private investment from Intel to build and expand semiconductor facilities in Arizona, Ohio, New Mexico, and Oregon and create nearly 30,000 jobs
Today, President Biden will travel to Chandler, Arizona, to visit Intel’s Ocotillo campus and announce that the Department of Commerce has reached a preliminary agreement with Intel to provide up to $8.5 billion in direct funding along with $11 billion in loans under the CHIPS and Science Act.....
And just when you thought things couldn't get any sleazier, Reuters cuts directly to the chase on what is actually going on here. Also March 20:
Arizona independents in play as Biden pushes big Intel investments....
