Intel won the dismissal of a shareholder lawsuit accusing the company of fraudulently concealing problems within its foundry operations. Those problems led to job losses and a dividend suspension, wiping out more than $32 billion in market value in a single day.
This writes Reuters. In a ruling made public on Tuesday, U.S. District Judge Trina Thompson in San Francisco rejected claims that Intel had waited too long to disclose a $7 billion operating loss in fiscal year 2023 related to its chips production for outside customers.
Intel did not disclose this loss until last April, when it changed the way it reported financial results. According to the court, shareholders wrongly attributed the $7 billion loss to the Intel Foundry Services division. However, they were not misled into thinking that that division’s reported results included the entire internal foundry business.
No misleading statements by Gelsinger
Thompson also argued that statements made by former CEO Patrick Gelsinger last March were not misleading. He then referred to significant traction and growing demand for foundry services. According to the judge, those statements referred to specific customers, not overall sales, which were down.
Shareholders’ lawyers did not immediately respond to a request for comment Wednesday. Intel declined to comment. Thompson allowed the plaintiffs to file an amended complaint.
Stock price artificially inflated
The lawsuit accused Intel of artificially driving up its stock price between Jan. 25 and Aug. 1, 2024. Then, Intel announced a quarterly loss of $1.61 billion. It also reported then that it would cut more than 15,000 jobs and suspend dividends to save $10 billion by 2025. Intel’s stock price fell 26% the next day, resulting in a $32 billion loss in value.
The Santa Clara, California-based company is struggling to fend off competition from rival chipmakers and capitalize on growth in artificial intelligence.
Intel’s competitors include Nvidia, AMD, Samsung Electronics, and Taiwan’s TSMC. In December, Intel fired Gelsinger.