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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

#241

Post by metaphor »

osigurdson wrote: post #115
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 Not necessarily. It really makes zero difference to the valuation of a company. Investors really punish companies that can barely cover their dividend (or worse have to borrow). If earnings are bad and revenues are not growing, the dividend is just a hokey shell game that works for about 5 minutes.

> Not necessarily.

Have you considered the structural implications of INTC float held by dividend ETFs alone[1], and how certain fund managers would be compelled to take action if all of a sudden Intel just stopped distributing a dividend? E.g. compare INTC holdings of Vanguard VYM[2] v. VanEck SMH[3] for about 5 minutes.

> It really makes zero difference to the valuation of a company.

Are you sure[4]? This is a bold, unsupported assertion without a single cite, as if to imply that valuation isn't a subjective craft practiced by people from diverse walks of life.

[1] https://www.etf.com/stock/INTC

[2] https://investor.vanguard.com/investment-products/etfs/profi...

[3] https://www.vaneck.com/us/en/investments/semiconductor-etf-s...

[4] https://www.cfainstitute.org/en/membership/professional-deve...

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#242

Post by deely3 »

bickfordb wrote: post #131
coldtea wrote: post #126

Earlier quoted context omitted.

> 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...

real talent leaves

So the realness of a talent defines by pay recieved! So upper management should be really talented individuals?

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#243

Post by caskstrength »

adg001 wrote: post #77

If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends. Investors get dividends when the management creates a reasonable amount of profits, not when employees have to waive their dues to do investors a favor.

> If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends.

Maybe they intentionally want to cause some attrition with this move without announcing additional layoffs? It is kinda win-win for them since they both save money on payroll and don't do explicit layoff with pay severances, risk of lawsuits, etc.

Obviously such approach can cause "dead sea effect", but they either don't care or assume it won't happen.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#244

Post by elihu »

sorry_outta_gas wrote: post #132
faeriechangling wrote: post #7

Earlier quoted context omitted.

I don’t know who is invested in Intel that's betting on anything but a high risk high reward underdog story comeback. Intel already was undercompensating to the point of driving the talent out of their company to begin with. These wage cuts are a sign for investors to flee faster because management lacks coherence. Management seems to be betting on a strategy of promising the world to gain government subsidies while…

Investing in this giant companies instead of providing funding to spur new ones is just dumb

Building a fab is very expensive. It's unlikely for some small new entrant to be successful, unless they happen to invent something better than EUV lithography or can somehow build all their machines from scratch.

Basically at this point, the big players are TSMC, Intel, and maybe Samsung. No one else can afford what it costs to be constantly upgrading their factories and doing the necessary basic research to get high quality and consistent yields.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#245

Post by adg001 »

caskstrength wrote: post #243
adg001 wrote: post #77

If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends. Investors get dividends when the management creates a reasonable amount of profits, not when employees have to waive their dues to do investors a favor.

> If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends. Maybe they intentionally want to cause some attrition with this move without announcing additional layoffs? It is kinda win-win for them since they both save money on payroll and don't do explicit layoff with pay severances, risk of lawsuits, etc. Obviously such approach can cause "dead sea effect",…

Yes, this is a tactic some companies resort to in order to incentive resignations. However, as you correctly highlight, this typically results in a loss of talents. AFAIK, Intel is already experiencing challenging times. Attracting – and retaining – new talents is especially hard to do, when the job marketplace learns about this peculiar work culture that prioritises paying dividents to talent retention. I would be very happy to be proven mistaken, for the sake of friends working at Intel.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#246

Post by penguinvondoom »

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.…

Dividents are political, as well as stuff like who owns the company and executive policy and rewards and so on. We just tend to not talk about it a lot, or even see it as a political problem, even though these things underlie a huge part of our society

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#247

Post by stevenhuang »

fooker wrote: post #159
epistasis wrote: post #148

Earlier quoted context omitted.

Depends on the investor. There is an entire class of investor that is focused on stocks that reliably deliver a dividend. I wasn't aware that Intel had joined old-economy companies like oil, but I also don't fully understand the dividend investor mindset, as I can't figure out a tax situation that makes it appealing...

> also don't fully understand the dividend investor mindset Suppose you have ~5 million invested for retirement. The dividend you could get from this is ~100k-150k per year. That is a very livable salary if you want to retire early (45? 50?) and focus on your family and hobbies. Does this make sense yet? It's essentially a conservative way to lead your live if you are not necessarily married to your profession.

Dividends are forced liquidation events.

If you want dividends simply sell a portion of your holdings every quarter.

When one focuses solely on dividend yield and not total return, which includes capital appreciation, it's a sign they don't really what's going on.

Where do you think the dividends are coming from? Straight from the company's market cap.

By preferring companies that consistently pay high dividend yields you're selecting for larger and established companies that have no better way to reinvest the money.

This may result in a fine choice if you want income, but the important distinction is not because of their dividend yield... it's because of their positions as market leaders.

Thus you may do just as well by selecting those large market leaders that pay no dividends but are reinvesting heavily.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#248

Post by ramraj07 »

miguelazo wrote: post #171
ramraj07 wrote: post #166

Earlier quoted context omitted.

What does surplus even mean with respect to wages? You could always pay your employees more! So what you mean is surplus is when you pay the market rate wages which in turn suggests the minimum amount of money the company should pay to ensure it gets the workers it needs. If they cut the salaries and still enough people stay, then the money they saved still is surplus by that definition.

“Gets the workers it needs” Clearly it doesn’t, since Intel couldn’t even save itself during a chip shortage when prices were sky high. They’re getting smoked by AMD and TSMC, in terminal decline much like the mismanaged Motorola of old. It certainly doesn’t have the leadership it needed, so if anyone should have their pay cut, it’s the fat cats at the top who financialized the company a la GE and ran it into the gro…

Sounds like the mistakes in those regard were bad strategic decisions not inability to attract talent.

Re: Intel Cuts Employee Pay to Maintain Quarterly Dividend

#249

Post by JustSomeNobody »

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.…

> Since executive compensation is stock-based, tied to the stock performance, or both, there's an obvious incentive to keep the dividend going.

The wealthy getting wealthier on the backs of the working class. In this case, literally TAKING from the working class to maintain the wealth machine.

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