Intel, the multinational chip technology company, recently announced that it will be cutting its dividend for the first time in many years. The decision to cut the dividend came after Intel reported weaker-than-expected financial results for the fourth quarter of 2021. TIn this article, we’ll take a closer look at Intel, its dividend cut, and the company’s 10-year trends in stock price and market share.
Intel dividend cuts are not strange to Monica Erickson, a long time capital investment grade corporate credit manager at DoubleLine capital, as interviewed on Yahoo Finance.
Background
First, let’s talk about what Intel does and why it gives a dividend to its shareholders. Intel is a major player in the technology industry, primarily focused on producing microprocessors and other computer components: in the past, almost every computer sold had an Intel chip. In recent years, some competitors emerged and took some market share. The company was founded a long ago, in 1968 and has since become a dominant force in the industry. Intel has a long history of paying dividends, with the company consistently paying out a dividend for the past 15 years, and its shareholders liked that. Dividends are a way for companies to reward shareholders by sharing their profits with them, and Intel was no exception.
What Intel did
Intel said it would cut dividend to 12.5 cents from 36.5 cents, a 65% reduction. Shares only fell slightly, 1% in midday trading. It comes amid several challenging quarters for the company. But let’s get to the basics!
Past dividend cuts
Also recently, in January 2022, Intel announced that it would be cutting its dividend by 26%, from $0.3475 to $0.2575 per share, as part of a broader restructuring effort. The decision to cut the dividend came after Intel reported weaker-than-expected financial results for the 4th quarter of 2021, with revenue and earnings per share falling short of Wall Street’s estimates.
Stock trends
Looking at Intel’s 10-year trends in stock price and market share, we can see that the company has had its share of ups and downs. From 2011 to 2015, Intel’s stock price remained relatively stable, with only moderate fluctuations. However, from 2015 to 2018, the stock price experienced significant growth, peaking in mid-2018. Since then, the stock price has experienced some ups and downs, but it has generally trended downward.
Market share and business performance
Intel’s market share has also seen its share of fluctuations over the past 10 years. The company has faced stiff competition from rivals like AMD and Nvidia, which have gained market share in recent years. In 2020, Intel’s market share dropped to 11.7%, down from 12.9% in 2019. However, the company’s recent restructuring efforts, including the introduction of new leadership, could help to boost its market share and overall business performance.
Speaking of business performance, Intel has faced some challenges in recent years. The company has struggled to keep up with competitors in terms of innovation, which has resulted in lost market share. In addition, Intel has faced manufacturing delays and supply chain issues, which have affected its ability to meet demand for its products.
Intel’s competitors include AMD and Nvidia, both of which have been gaining market share in recent years. AMD has been particularly successful, thanks to its innovative processors and graphics cards. Nvidia has also been growing in the market, with a focus on gaming and AI technology.
In conclusion, Intel’s decision to cut its dividend is a significant development for the company and its shareholders. While the company has faced its share of challenges in recent years, including declining market share and business performance, Intel remains a major player in the tech industry. The company’s recent restructuring efforts, including the introduction of new leadership, could help to boost its market share and overall business performance. However, the company will need to continue to innovate and adapt to changing market conditions if it wants to stay competitive in the years ahead.