Intel executives are facing a shareholder derivative lawsuit filed by an investor who claims they were misled about the financial performance of the company’s foundry business. The complaint, filed by Stourbridge Investments, alleges that Intel management made false statements about the success of its foundry business from January 25 of this year. The investor is seeking compensation for financial damages and a revision of Intel’s corporate governance to protect shareholders from similar incidents in the future.
The lawsuit involves a shareholder or group of shareholders suing the corporation’s management on behalf of the company and shareholders for breaching their duties. CEO Pat Gelsinger, Chief Financial Officer David Zinsner, and nine other board members are named as defendants in this case. The issue centers around Intel’s reorganization to separate its semiconductor manufacturing operation to function as a contract manufacturer for both Intel’s chips and external customers, known as IDM 2.0 and Intel Foundry.
Intel updated its foundry model in 2024 so that manufacturing services would be under a separate group responsible for its own financial reporting. This move was expected to generate cost savings and improve overall results for the company. However, on April 2, Intel revealed a revised version of its financial results for 2023, showing that Intel Foundry experienced an operating loss of $7 billion. This news caused Intel’s stock price to drop significantly.
The investor claims that Intel’s stock price fell even further when the company announced its first quarter 2024 results on April 25, revealing a decline in Intel Foundry revenue compared to the previous year. The lawsuit alleges that Intel’s executives made false statements about revenue growth and overall prospects for the company, leading to misleading information for investors.
The investor asserts that the defendants failed to disclose significant operating losses for Intel Foundry in 2023, making their positive statements about the company’s business operations misleading and lacking a reasonable basis. Each defendant director is accused of approving public statements without providing accurate information to investors. The investor has requested a jury trial for the case.
Intel has declined to comment on the lawsuit.
Article Source
https://www.theregister.com/AMP/2024/06/25/intel_foundry_investor_lawsuit/
