How Safe Is Intel's Dividend?
Shares of chip giant Intel (NASDAQ: INTC) soared on Friday after the company laid out plans to aggressively cut costs. Not only is the PC market imploding following a pandemic bonanza in 2020 and 2021, with global unit shipments tumbling 19.5% year over year in the third quarter, but Intel is also seeing demand for server chips from enterprise and cloud customers soften.
The plan is to slash costs by $3 billion in 2023 and grow the annualized cost reductions to between $8 billion and $10 billion by the end of 2025. That's a huge cut. For perspective, Intel expects its total revenue this year to be around $64 billion.
This cost-cutting comes as Intel continues to invest aggressively in manufacturing as it builds its own third-party foundry business and attempts to launch five process nodes in a four-year period. The plan is to keep free cash flow at roughly breakeven throughout this investment cycle. For that to happen now that demand has deteriorated further, cost cuts are necessary.
Source Fool.com
