Intel shareholders are suing the chipmaker after what they deemed a bungled decision, which led to the company's stocks plummeting in just a single day.
According to Reuters, shareholders alleged that Intel fraudulently concealed problems from them. Such problems led to the posting of weak results, laying off workers, and also suspending dividends. That led to the market value of the company sinking, losing a reported total of around $32 billion in one day.
Shareholders revealed that they were blindsided when the company said Aug. 1 that its "foundry" business, particularly the one for making chips on contract for outsiders, was "floundering." The company was confronted with a situation where its revenues declined, and yet they were faced with more costs.
The proposed class action lawsuit was filed with the federal court in San Francisco. In the suit, the plaintiffs allege that Intel made misleading statements about the company, which led to its stock price being inflated.
Prior to the filing of the complaint, Intel announced that it will be laying off more than 25% of its workforce, or about 15,000 jobs. The company also said that it will suspend its dividends, which would start in the fourth quarter.
Intel justified the moves as a way to save $10 billion in 2025. The company's revenues have been falling, and it also posted a second-quarter net loss of $1.61 billion.
For quite some time, Intel has been trying to level the playing field when it comes to making chips where AI is concerned, Tech Central noted. However, rival companies -- Intel include Nvidia, Samsung Electronics and Taiwan's TSMC. -- always seem to outrun the old timer.
