In the eyes of some investors, the last great reason to own Intel (INTC 2.96%) is gone. Management slashed its quarterly dividend from $0.365 to $0.125 to fund its long-term strategy, which dropped its yield from 5.8% to just 2%.

Is Intel stock worth owning with that catalyst gone? Let's find out.

Intel shows signs of continued weakness

Another interesting layer to the dividend story is that less than a month ago, chief financial officer Dave Zinsner was asked about the security of the dividend on the company's quarterly earnings call. He said that Intel was "committed to maintaining a competitive dividend" and that it takes a "disciplined approach to the capital allocation strategy."

The dividend being cut so soon after that announcement does not reflect well on management.

But the dividend cut was necessary. In the fourth quarter, Intel posted a $700 million loss, driven by revenue falling 32%. This means Intel was using its cash reserves to fund the dividend -- not a sustainable strategy.

Its gross margin also fell from 54% last year to 39% in the fourth quarter, indicating Intel had to slash prices to get to the revenue levels it did. Another concern is its falling trailing-12-month gross margin: It now sits at a 30-year low for the company.

INTC Gross Profit Margin Chart

INTC gross profit margin data by YCharts.

The primary driver of this demand evaporation is an atrocious PC market. First, the economic outlook isn't the greatest, so consumers aren't rushing to upgrade their electronics. Second, many consumers recently upgraded their PCs within the past few years, during the pandemic. Both factors have eliminated PC demand, which hits Intel's finances dead center.

The 2023 first quarter isn't looking any better, with management guiding for around $11 billion in revenue, down 40% from 2022's $18.4 billion (for reference, first-quarter 2022 revenue was down 7% from 2021).

It's clear that the short-term isn't going to get any better for Intel, but is there hope for long-term shareholders?

Management is cutting employees' compensation

One of the items Intel brought up in its announcement to cut the dividend was its cost-savings initiatives. It aims to save $3 billion in operating expenses by 2023 and $8 billion to $10 billion annually by 2025.

It is doing this, the company says, by "reducing compensation and rewards programs for employees and executives." According to the website Neowin, this includes at least a 5% pay cut companywide, suspension of bonuses, and a reduction in its 401(k) match.

However, a company's employees are among its most vital resources. If you treat them right, you'll get the most out of them. Unfortunately, decreasing operating expenses this way might look good on the quarterly report, but it can poison a workplace culture and affect future output.

Intel is also spending big money on its Ohio chip factory: a $20 billion investment that could potentially expand to $100 billion. While I'm all for moving chip production back into the U.S., Intel may need to reduce the factory's footprint or capacity to right-size the building based on the lower demand, because Intel's falling gross margins indicate a supply glut.

INTC Capital Expenditures (TTM) Chart

INTC Capital Expenditures (TTM) data by YCharts. TTM = trailing 12 months.

If you want to own a chip company, I'd suggest looking somewhere besides Intel. Its business is struggling worse than that of its competitors, and with the company being behind on cutting-edge technologies like 3- and 5-nanometer chips, there are not a lot of compelling reasons to own the stock, especially with the dividend reduction.