Intel To Stop Publishing Business Forecasts

The company, one of the biggest high-technology groups in Silicon Valley, is the first to take such action over a proposed state law which would make it easier for shareholders to sue firms for securities fraud.

Intel will eliminate all forward-looking statements about its financial prospects in statements and discussions with Wall Street analysts, and would only discuss past performance.

The company has cancelled a meeting with analysts scheduled for the end of the month. Proposition 211, if passed when Californians cast their presidential votes in November, could increase the exposure to frivolous stockholder suits for all firms with a California presence, Intel said.

 

The measure would render useless federal securities law reforms last year that limited the liabilities of publicly held companies. That law enabled firms to protect themselves against shareholder lawsuits by adding a safe harbour statement to any discussion of future performance.

Such statements typically include risk factors that might have a negative effect on financial performance.

The proposed Californian law would eliminate the protection, enabling shareholders to sue companies in state courts if they believed a companys statements had been misleading. The measure would also make a companys officers and directors personally liable in claims against a company. Mr Kirk West, co-chairman of Taxpayers Against Frivolous Lawsuits, a coalition of industry and community groups opposed to Proposition 211, said: Other publicly traded companies will surely follow Intels lead. He added: This means less information on which investors can base their investment decisions. Intel said it regretted not being able to offer more information to shareholders about its fast-changing business. Although the passage of the measure was uncertain, the group did not intend to assume the risk of making forward-looking statements concerning the companys business outlook. High-technology companies have been vulnerable to shareholder lawsuits because their stocks are volatile. Hundreds of companies have already been hit with shareholder suits after unexpected swings in their stock prices. Intels move disappointed securities analysts. It will make our jobs tougher, said Mr Mark Edelstone, a semiconductor industry analyst at Prudential Securities. But if this causes voters to give more thought to the issue then it may be for the best. Supporters of Proposition 211 dismissed Intels action as a public relations stunt.