Senator Elizabeth Warren expressed concern to Commerce Secretary Howard Lutnick about the U.S.’s recent investment in Intel (NASDAQ:INTC), calling it “extremely risky” given the beleaguer chipmaker’s history.
“The President’s remarks in the following days involved fantastical claims, such as his assertion that he paid ‘zero’ for $11 billion in shares of Intel,” Warren wrote in her letter to Secretary Lutnick. “But the details of the President’s deal, revealed by Intel in its latest filings with the Securities and Exchange Commission, tell a different story: the President is handing billions of dollars of taxpayer money to Intel and asking for nothing in return.”
Warren continued: “What is the American public getting from this deal? An extremely risky investment. Intel’s stock lost 60 percent of its value last year, and its new CEO has revealed no plans to turn the company around beyond cutting jobs. You have claimed that the taxpayers are getting “a piece of the action — but this comes with significant risks as the company is suffering from declining revenue, missed business opportunities, and a struggle to operationalize new manufacturing processes.”
In a securities filing after the deal was announced, Intel cited several risks associated with the investment, including an impact to its ability to receive grants and funding from the government and concerns about international sales.
Intel also said that the deal could “cause other government entities to seek to convert their existing grant arrangements with the company into equity investments or be unwilling to support the company with future grants, either of which could limit the Company’s access to capital, increase the company’s cost of capital, or increase the Company’s future operating costs.”
The Santa Clara, Calif.-based Intel also explained the transactions are “dilutive” to existing stockholders.
Warren told Secretary Lutnick to answer her questions regarding the Intel investment no later than Sept. 17.