Intel was poised to wipe out nearly $25 billion from its market value on Friday, marking its steepest decline since 2000, after it halted its dividend and reduced its staff to finance a costly overhaul of its semiconductor operations.
The company's shares dropped approximately 20 percent in pre-market trading following Intel's announcement late Thursday that it expected quarterly revenue to fall short of projections and that it would lay off 15 percent of its workforce. This has sparked concerns about its capacity to keep pace with Taiwan's TSMC and other competitors it has lagged behind in recent years.
Once the global leader in chip manufacturing, with the 'Intel Inside' emblem a prominent marketing asset on PCs in the 1980s and 90s, Intel was part of the dot-com boom's 'Four Horsemen' alongside Cisco Systems, Microsoft, and Dell. Its market capitalization reached nearly $500 billion in 2000 before plummeting during that year's market downturn and never fully rebounding. Despite maintaining its stronghold in powerful PC chips, Intel was unprepared for the advent of Apple's iPhone in 2007 and other mobile devices that required more energy-efficient and affordable processors.
Should Friday's downturn persist, Intel's market capitalization would shrink to around $100 billion, less than five percent of Nvidia's and roughly 40 percent of Advanced Micro Devices', the two PC chip giants it once heavily outpaced. The selloff would also diminish Intel's value below that of Applied Materials and Lam Research, firms that supply equipment to Intel's manufacturing plants.
'Intel has been one of the overlooked tech giants of the past couple of decades,' remarked Michael Schulman, Chief Investment Officer of Running Point Capital. 'It never surpassed its 2000 peak and has struggled to restore earnings to pre-AI revolution levels.'
