Intel executives are facing a shareholder derivative lawsuit from investor Stourbridge Investments, who alleges that they were misled about the financial performance of the company’s foundry business. The lawsuit claims that Intel management made false and misleading statements about the success of the foundry business, resulting in a drop in share price once the true situation was revealed. The investor is seeking compensation for financial damages and changes to Intel’s corporate governance to protect shareholders.
The lawsuit names CEO Pat Gelsinger, CFO David Zinsner, and nine other board members as defendants. It revolves around Intel’s reorganization plan to separate its semiconductor manufacturing operation into a contract manufacturing entity called Intel Foundry. This restructuring was part of CEO Gelsinger’s vision for the company’s future, known as Integrated Device Manufacturing 2.0 (IDM 2.0), which aimed to enhance manufacturing capabilities.
The complaint alleges that Intel revised its foundry model in early 2024 to incorporate a new financial reporting structure, through which Intel Foundry would be accountable for its profits and losses separately. The changes were expected to lead to cost savings and improve overall results for the company. However, Stourbridge claims that when Intel released its revised financial results in April 2024, it showed that Intel Foundry had incurred significant losses in the previous year, causing a drop in the company’s stock price.
The lawsuit points to statements made by Intel executives, including Gelsinger, during earnings calls and reports, which allegedly downplayed the challenges faced by Intel Foundry and misrepresented its financial performance. Stourbridge argues that these statements were false and misleading, failing to disclose material facts about the company’s operations.
Stourbridge holds each defendant director responsible for the public statements made by Intel during the relevant period and is requesting a jury trial to address the alleged misconduct. Intel has chosen not to comment on the matter.
In summary, a shareholder derivative lawsuit has been filed against Intel executives for allegedly misleading statements regarding the company’s foundry business, resulting in financial losses for investors. The lawsuit highlights discrepancies between Intel’s positive public statements and the actual financial performance of its foundry operations, leading to a decline in the company’s stock price. Stourbridge Investments seeks compensation for damages and changes to Intel’s governance practices to prevent similar incidents in the future. Intel has opted not to provide a response to the lawsuit.
Article Source
https://www.theregister.com/2024/06/25/intel_foundry_investor_lawsuit/
