Uhh, they also cut comp for all the rank and file employees, but did not cut the dividends they issue (that disproportionately benefit executive class employees). Cutting the dividends would save much more money than shitting on their employees, but the goal is to ensure any cuts are restricted to things that don't really impact executives, board, etc - even if the long term costs are much worse.
They've fallen way too far behind to start cutting resources aggressively... restructuring makes sense, but burning all your best workers is going to be counterproductive in this case
If they cut dividends they get kicked out of a multitude of basket goods retirement products which will absolutely bomb the living fuck out of the stock price and send them on an even worse death spiral.
So? Intels stock price dropping does not impact intel’s revenue, its expenses, or in fact any part of running the company at all.
Also eventually the cost of losing all your good people, and failing to keep up with the rest of the industry will mean that 5% dividend is 5% of much less actual income.
That's absolutely not at all how it works. If you tank your stock price you tank your ability to raise funds which tanks your debt. Your stock price is absolutely important to running your company.
I'd be interested in seeing the banks that say "we will give you a loan on the basis of your artificially inflated stock price, that is maintained by you giving out more dividends than you can afford at the cost of your long term revenue potential" vs "we will give you a loan on the basis of your long term ability to repay that debt".
If on the other hand you mean "raising funds" by selling stock in the company, then obviously you need that stock to be valuable when you actually need to raise the funds, except intel is only able to maintain its present stock price by destroying it's future revenue potential. e.g. its stock _only_ has short term value at the moment because of over paying dividends, if it needs to "raise funds" it means it no longer has the cash for the BS dividend so its stock will be worthless then.
Maintaining a dividend yield to enable fund raising, only makes sense if maintaining said yield doesn't require directly destroying the true value of the stock.
The dividend yield is now over 5%; how is it possible that they can't give it even a symbolic little cut? If anyone has snark-free information about this story I'd love to hear it.
Given the CHIPS Act too-important-to-fail backstop Intel has, this almost seems like risk free money.
That would just reinforce the stock price death spiral that is being artificially propped up by the high dividend.
What I'm really wondering about is how Intel can afford to build all the factories that government subsidies are being given out around the world. Getting a subsidy on construction and even operating costs can't defray the cost of operating those factories if there are no orders for the product coming out of them. Building a foundry up to the scale of TSMC takes decades, and Intel is not a trusted foundry partner. Just look at what happened with prior Intel foundry attempts with customers like Achronix.
"Chief Executive Officer Pat Gelsinger is taking a 25% cut to his base salary, the chipmaker said Tuesday." What is the proportion of base salary in the total compensation?
- No merit salary increases or promotions
- No more quarterly bonuses
- No more employee recognition programs (e.g. no more $25 gift card for working at Intel for 5 years)
- 401k match drops from 5% to 2.5%
and probably worst of all, 5% salary reduction for grades 7-11.
But at least they didn't cut the dividend! What a horrible nightmare that would have been...
Yeah, I remember when I got mine—I wasn't expecting anything, and I kinda wished they hadn't given me anything at all if they were going to just give $25. Felt pretty cheap.
20 comments
[ 2.6 ms ] story [ 47.0 ms ] threadThey've fallen way too far behind to start cutting resources aggressively... restructuring makes sense, but burning all your best workers is going to be counterproductive in this case
They have the cashflow to cover any R&D and capital investment without the need to depend on equity financing
Also eventually the cost of losing all your good people, and failing to keep up with the rest of the industry will mean that 5% dividend is 5% of much less actual income.
If on the other hand you mean "raising funds" by selling stock in the company, then obviously you need that stock to be valuable when you actually need to raise the funds, except intel is only able to maintain its present stock price by destroying it's future revenue potential. e.g. its stock _only_ has short term value at the moment because of over paying dividends, if it needs to "raise funds" it means it no longer has the cash for the BS dividend so its stock will be worthless then.
Maintaining a dividend yield to enable fund raising, only makes sense if maintaining said yield doesn't require directly destroying the true value of the stock.
Given the CHIPS Act too-important-to-fail backstop Intel has, this almost seems like risk free money.
What I'm really wondering about is how Intel can afford to build all the factories that government subsidies are being given out around the world. Getting a subsidy on construction and even operating costs can't defray the cost of operating those factories if there are no orders for the product coming out of them. Building a foundry up to the scale of TSMC takes decades, and Intel is not a trusted foundry partner. Just look at what happened with prior Intel foundry attempts with customers like Achronix.
https://archive.today/HgRed
- No merit salary increases or promotions - No more quarterly bonuses - No more employee recognition programs (e.g. no more $25 gift card for working at Intel for 5 years) - 401k match drops from 5% to 2.5%
and probably worst of all, 5% salary reduction for grades 7-11.
But at least they didn't cut the dividend! What a horrible nightmare that would have been...
Glad I'm no longer working for Intel.
Wow, what can $25 even get you at Intel?
Umm, yeah.