By Jonathan Stempel
(Reuters) – Intel won the dismissal of a shareholder lawsuit accusing the chipmaker of fraudulently concealing problems in its foundry business, leading to job cuts and a dividend suspension that wiped out more than $32 billion of market value in one day.
In a decision made public on Tuesday, U.S. District Judge Trina Thompson in San Francisco rejected claims that Intel took too long to reveal a $7 billion fiscal 2023 operating loss linked to its business of making chips for outside customers.
Intel did not disclose the loss until last April, when it made changes to how it reported financial results.
But the judge said shareholders incorrectly attributed the $7 billion loss to the Intel Foundry Services business unit, and were not misled into believing the unit’s reported results “included results for the entire Internal Foundry Model.”
Thompson also said statements last March by former Chief Executive Patrick Gelsinger that Intel was enjoying “significant traction” and “growing demand for our foundry offering” were not misleading because they concerned specific customers rather than overall revenue, which was falling.
Lawyers for the shareholders did not immediately respond on Wednesday to a request for comment. Intel declined to comment. Thompson said the plaintiffs may file an amended complaint.
The lawsuit accused Intel of inflating its stock price from January 25 to August 1, 2024, when Intel posted a $1.61 billion quarterly loss and said it would lay off more than 15,000 people and suspend its dividend to help save $10 billion in 2025.
Intel’s share price fell 26% the next day, resulting in the $32 billion loss of market value.
The Santa Clara, California-based company has struggled to fend off competition from rival chipmakers and benefit from growth in artificial intelligence.
Its rivals include Nvidia, Advanced Micro Devices, Samsung Electronics and Taiwan’s TSMC. Intel ousted Gelsinger in December.
The case is In re Intel Corp Securities Litigation, U.S. District Court, Northern District of California, No. 24-02683.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)
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