Intel Corporation Subsidiary Fined For Exporting Encryption Software

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Intel Corporation (NASDAQ:INTC) subsidiary Wind River Systems will pay a fine of $750,000 to settle charges that it sold encryption software products to foreign government customers and to a banned organization in China without the required licenses, the U.S. Department of Commerce announced Wednesday.

Voluntary disclosure helped lower the fine

The subsidiary of the world’s largest chipmaker sold operating software worth $2.9 million to the government and various other customers in China, Hong Kong, Russia, Israel, South Africa, and South Korea between 2008 and 2011, according to the department. However, the Intel subsidiary disclosed the transactions voluntarily in 2012, says a report from Reuters.

The Bureau of Industry and Security within the Commerce Department is the controlling authority over exports and re-exports of commodities, technology, and software related to national security and foreign policy. For security reasons the supply of some software in restricted. A few of the recipients were on the “Entity List” of the BIS.

Those on the list are considered a greater risk to divert resources to weapons of mass destruction programs, terrorism or other such activities against the United States national security or foreign policy interests.

Assistant Secretary of Commerce for Enforcement David W. Mills said that they are assessing the penalties in this case because the breach continued over a period of several years. Mills added that since the Intel  subsidiary did not shy away from disclosing the violations voluntarily, it has received significant mitigation in the fine.

Mills said that companies should take this penalty seriously, and it should be a reminder for their responsibilities, “and, when using license exceptions, to ensure their customers are eligible recipients.

Will Intel raise dividend?

Separately, analysts at Northland Securities assigned a Market Perform rating to Intel in a report issued on Tuesday. On an average, analysts assign a Hold rating on the stock with an average price target of $34.

Recently, the chip maker announced a quarterly dividend of $0.225 per share to be paid on December 1st. Intel now pays an annualized dividend of $0.90 with a dividend yield of 2.69%. The company has been paying a flat dividend for quite some time now, which might not be making shareholders very happy. There are expectations that Intel will increase its dividend in 2015.

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