Pat Gelsinger, CEO of Intel (INTC), refuted rumors that the hard times Intel is experiencing would lead to the end of dividend payouts to investors.
In an interview with Yahoo Finance Live, Gelsinger said, “We are committed to the dividend and to a very healthy and competitive dividend. We’re also making big long-term strategic investments, so we’re putting all of that together and looking very carefully at the capital allocation priorities for the company overall, even as we remain committed to rewarding our shareholders with the dividend.”
In 2022, the company paid $6 billion in dividends to shareholders. However as the company’s cash flow has fallen by about $14 billion compared to the prior year, and with fourth quarter results under pressure, some analysts have asked if it is time for the company to do away with the dividend.
Fourth quarter sales declined 32% year over year, with sales in the all important client computing and data center segments falling 36% and 33% respectively.
Overall, the company had $14 billion in revenue in Q4, missing the $14.4 billion estimate. Adjusted earnings per share came in at $0.10 vs a $0.19 estimate. The client computing segment came in at $6.6 billion vs a $7.4 billion estimate. The data center segment came in at $4.3 billion, exceeding its $4 billion estimate.
The stock declined more than 6% during Friday’s session, as the company offered dour guidance for the next quarter.
It predicted revenues would be between $10.5 billion and $11.5 billion, though Wall Street was expecting $14 billion. Gross margins were expected to come in around 39%, however analysts were expecting margins to be over 45.5%.
Citing volatile economic conditions, the company did not offer full-year guidance.
Citi analyst Chris Danely wrote in a client note, “While the company is committed to a cost reduction plan of $8.0-$10.0 billion by 2025, it doesn’t help the core manufacturing problem. And we believe Intel’s ongoing investments in growth markets may not perform as expected. We maintain our Neutral rating on Intel driven by downside to estimates.”
