Intel Corp. (NASDAQ:INTC) is under fire from investors alleging the chip giant misled shareholders about the performance of its foundry business. A federal class-action lawsuit filed in the Northern District of California claims Intel made false and misleading statements about the financial health and progress of its foundry operations.
The complaint centers on Intel's repeated assurances that its foundry plans were on track and delivering as promised. Investors allege that these statements were contradicted by the company's subsequent announcement of severe problems in the foundry business, which led to a $10 billion cost-cutting plan, including layoffs and dividend suspension.
On August 1, when Intel unveiled these dramatic measures, its share price plummeted by 26%, wiping out billions of dollars in market value. Analysts swiftly downgraded the stock, citing concerns about the company's manufacturing capabilities and overall business outlook.
The lawsuit contends that Intel's decision to accelerate its move to a higher-cost Ireland fabrication facility masked underlying problems and inflated profit margins.
"We are investigating whether Intel may have misrepresented the challenges its foundry business faced," said Reed Kathrein, a partner at Hagens Berman, a law firm seeking to lead the case on behalf of the investor class.”
Shares in “Mr. Chips” rallied 53 cents, or 2.7%, to $20.64.
