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Intel Cuts Employee Pay to Maintain Quarterly Dividend

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Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#181

Post by graton »

elihu wrote: post #173
graton wrote: post #156

Earlier quoted context omitted.

They had a loss last quarter of $700 million [1]. They had a loss of $500 million in Q2 of 2022 [2] [1] https://www.intc.com/news-events/press-releases/detail/1600/... [2] https://www.intc.com/news-events/press-releases/detail/1563/...

Good point: it was a loss according to GAAP, but the non-GAAP results weren't a loss. Whereas it looks like they're projecting a non-GAAP loss as well next quarter. (I don't know what the relevant differences are here on GAAP vs non-GAAP.)

GAAP = Generally Accepted Accounting Principles

non-GAAP = Whatever we decide? :) Okay, I don't really know.

Real info: https://www.investopedia.com/articles/financial-analysis/062...

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#182

Post by matrix_overload »

anonreeeeplor wrote: post #55

You don’t want a Silicon job because your talent is illiquid. They can take a giant dump directly in your mouth while making steady eye contact and you can’t leave because there is nowhere to go. In software and in startups if you have relevant skills and modern, up to date experience you can switch easily. Don’t work in industries that are declining and have no future and require advanced technical training that is…

On the other extreme, you don't want to do completely commodity work, or you'll be stuck competing on who can move the subscribe button for a smaller bowl of ramen.

The sweet spot is somewhere in between, where you have non-trivial skills others don't, and multiple companies willing to pay for them. In essence, supply and demand, like always.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#183

Post by runamok »

ryanisnan wrote: post #139
bickfordb wrote: post #131

Earlier quoted context omitted.

real talent leaves

This. I've had one pay cut in my career, and it immediately made me just up and leave. I don't know why one would tolerate such a thing, unless there was significant up-side still on the table.

I have heard about companies doing this in times of economic downturns to prevent layoffs. If that was the cause and it was communicated as such and temporary I'd be willing.

Example: https://www.independent.co.uk/news/business/news/toyota-staf...

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#184

Post by echelon »

coldtea wrote: post #126
manv1 wrote: post #90

If Intel cuts its dividend the stock will crater. Since executive compensation is stock-based, tied to the stock performance, or both, there's an obvious incentive to keep the dividend going. The dividend has become more political than normal. In finance theory, a dividend is supposed to be a paid-out return. If you're cutting salaries to pay the dividend that means that you don't have enough surplus...by definition.…

> If Intel cuts its dividend the stock will crater. Wait till you see what will happen to the stock when talent leaves the company (whatever it has left, anyway) after such pay cuts...

What is Intel doing here?

Investors already know this is deception and the market will value the company accordingly.

Intel should face the music and pay the price. Suspend the dividend entirely. (AMD last paid a dividend back in 1995!)

Growth stocks shouldn't be dividend stocks. That signals they have nowhere else to deploy the capital and are returning profits to investors. A buyback would be a better way to return cash to investors.

Intel's 5%+ dividend is insane anyway. That percentage yield on a non-REIT, non-PTP, non-cyclical (energy, etc.) business is very unhealthy and points to how anemic the stock is.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#185

Post by epistasis »

jmillikin wrote: post #169
epistasis wrote: post #164

Earlier quoted context omitted.

No, it absolutely makes no sense to me. Dividends are taxed as income, capital gains is taxed at different rates.

In the USA, dividends may be taxed at the capital gains rate depending on the company (Intel qualifies) and how long the position has been open. https://www.investopedia.com/terms/q/qualifieddividend.asp

Aha, thank you, this is exactly the reason.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#186

Post by jackthetab »

tshaddox wrote: post #140
faeriechangling wrote: post #67

Earlier quoted context omitted.

What stops the Americans from simply stealing (or buying) TSMC or Samsung or whatever technology with how deep their fingers are into those companies and starting up fabs as needed? Even if the world "Deglobalizes" overall does that really mean that America maintaining its influence over countries like Taiwan and Japan and South Korea is not an option if the issue is important enough? America also has AMD/Nvidia for…

My understanding is that the semiconductor supply chain is hyper-globalized with many steps in the process being so enormously capital-intensive that only a single firm can produce them at scale, the firms producing these various steps are widely distributed geographically, and each step is nearly useless if any step is missing. And I wouldn’t just be worried about something simple and direct like “the United States…

Sounds like you read Peter Zeihan too. :-)

As a matter of fact, he published a video today talking about this topic in some detail. You can find it on YT with the title "Semiconductors: China's the Odd Man Out".

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#187

Post by tommilukkarinen »

"This was an incredibly dumb move, as employees will become “quiet quitters” and lose morale."

Suppose you need to cut employment costs. Is this always better than firing staff?

- For employees: you share the burden instead of some facing hard options (firing) so if you are a team player, this is the choice for you. Those who have options in the market, can still leave for greener pastures; if this was the deciding factor, perhaps they were not too committed on the job anyway? If your unit was on the brink of being profitable (such as being few percent on the negative)), it was just brought to the profitable side, and it might be that now the entire unit can keep their jobs.

- For the company: you still have the option for downsizing, and you just bought time to plan it more thoroughly.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#188

Post by kergonath »

vkou wrote: post #45
rz2k wrote: post #6

When bailed out banks paid bonuses it was understandably unpopular, but there was a certain logic that retaining talent optimized performance of the remaining bank, and therefore it was ultimately in the interest of taxpayers. It seems surprising that Intel either doesn't think that retaining top talent is in the interest of shareholders, or thinks that investors aren't able to understand the investment. I would assu…

> It seems surprising that Intel either doesn't think that retaining top talent is in the interest of shareholders, When everyone around you is laying thousands of people off, your top talent isn't likely to leave you, regardless of what indignities you heap on it.

But it destroys loyalty, and they will leave at the first opportunity, which will happen sooner or later. It does not sound good as a longer-term strategy.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#189

Post by kergonath »

landemva wrote: post #11
rz2k wrote: post #6

When bailed out banks paid bonuses it was understandably unpopular, but there was a certain logic that retaining talent optimized performance of the remaining bank, and therefore it was ultimately in the interest of taxpayers. It seems surprising that Intel either doesn't think that retaining top talent is in the interest of shareholders, or thinks that investors aren't able to understand the investment. I would assu…

Or Intel has found cover from other tech shops to 'do the necessary' and prune the dead wood. It's about time the C level began to look at employee performance and contribution to profits or losses.

Employee performance is nothing without good leadership and sound strategy. Intel seems to be lacking both, and it’s not the fault of most of the employees getting pay cuts.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#190

Post by foepys »

runamok wrote: post #183
ryanisnan wrote: post #139

Earlier quoted context omitted.

This. I've had one pay cut in my career, and it immediately made me just up and leave. I don't know why one would tolerate such a thing, unless there was significant up-side still on the table.

I have heard about companies doing this in times of economic downturns to prevent layoffs. If that was the cause and it was communicated as such and temporary I'd be willing. Example: https://www.independent.co.uk/news/business/news/toyota-staf...

In Germany this is known as "Kurzarbeit" (literal translation: short work). The company reduces the work hours of employees and the pay gets cut proportionally. The cut hours will be paid by the state at a rate of 60% (67% for workers with children, the rate is the same as unemployment).

So if a worker's hours get cut by 50%, they still get paid 80-83.5% of their wage. The company can choose to get the employees' pay back to 100% if they pay the difference, which sometimes happens if the hours are cut because there is not enough work and not because the company is in financial distress.

This helped quite a lot of companies to stay in business during COVID.

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