(Finance) – S&P Global Ratings has lowered the rating on IntelUS semiconductor giant, from “A-” to “BBB+” with outlook “negative“.
The rating agency expects the revenues of Intel are weaker than previously expected over the next two to three years, as the customer spending environment and competitive dynamics in its core business segments continue to be challenging.
Intel’s plan to implement is only partially cost reductions above $10 billion in 2025, including operating expense reductions and capital spending cuts, mitigates the lower growth trajectory. S&P expects these actions to translate into positive free operating cash flow (FOCF) starting in 2025, approximately two years ahead of previous expectations.
“We consider the company’s decision to suspend the dividend starting from the fourth quarter of 2024 favorably from a credit perspective”, it is stated in the report.
While Intel’s FOCF is expected to improve, S&P still considers the FOCF-debt ratioexpected to be 3% in 2025 and 10% in 2026, weaker than deemed consistent with the rating (15%). It also expects debt/EBITDA to reach mid-2x by the end of 2025 and low-2x in 2026.
“The negative outlook reflects the Intel’s weaker revenue and earnings profile in the near termas it continues to navigate industry headwinds and competitive pressures in its core business segments – it is highlighted – Successful execution of its technology roadmap, timely product launches and achievement of planned cost reductions would help Intel’s credit metrics return to levels appropriate to its current rating over the next two years”.