Intel has reportedly escaped a massive shareholder lawsuit, which previously accused the firm of hiding foundry losses and manipulating financial performance.
Intel's Shareholder Lawsuit Gets Dismissed On The Grounds Of Insufficient Evidence; Plaintiffs Can Still File An Amended Complaint
Well, it seems like Team Blue has gotten rid of a massive problem coming their way, and considering all the issues they are surrounded by, this is undoubtedly a relief for them. According to Reuters, Intel has won a lawsuit filed by the company's shareholders, which claimed that Intel had taken too long to disclose $7 billion worth of operating losses back in 2023 and had misreported financial results. U.S. District Judge Trina Thompson in San Francisco has rejected the shareholders' claim, citing a lack of evidence, but the plaintiffs can file an amended complaint, given that they came back with stronger arguments.
While we have covered the lawsuit extensively in the past, for a quick recap, the lawsuit was filed shortly after Intel's quarterly results, where shareholders claimed that the firm "deliberately" suppressed the economic downturn they were facing and instead assured that everything was fine. The lawsuit held Intel's former CEO Pat Gelsinger and CFO David Zinsner, claiming that Team Blue didn't disclose the $7 billion operating losses in time, which meant that shareholders were in the "delusion" that IFS was performing well.
Judge Thompson, however, stated that Intel didn't mislead its shareholders about losses since they were part of the "entire Foundry model," not just the specific division responsible for producing chips for external partners. Moreover, the optimism towards IFS shown by Intel's former CEO was also not misleading, given that Gelsinger mentioned their progress with specific partners rather than the division as a whole. While the lawsuit is potentially over for now, its repercussions are still pretty visible.
Following the lawsuit, Intel's market value saw a whopping 26% decline, losing over $32 billion in valuation. Since then, Team Blue has struggled to find ground in the market. With the Trump administration in the office, there's hope for Intel's future, but uncertainty still remains, given that competitors like TSMC are increasing their influence over US markets.
