What a dumb article. Corporations exist for the purpose of returning money to shareholders, not for the purpose of permanently employing unneeded workers.
Strictly speaking that's not true and, it's not fair to call it a dumb article.
Corporations are supposed to what's best for the shareholders. Milton Friedman equated it to maximizing profit, but it's not necessarily so.
Even if you assume that the profit is the sole reason for the corporation, it's not clear laying off 20% worker would necessarily lead to maximizing shareholder profit in the following years (e.g., it could lead to stifled innovation, lower employee morale, etc).
It’s not necessarily clear, but it’s also definitely not clear that the layoffs will be detrimental to the company either. The title of these types of articles implies that the dividend and the layoff are at odds with each, which they aren’t.
I think unless you're firing the executives that overhired, you're not fixing the root cause of the problem which is bad leadership. There's a "hack" that's causing the market for leadership to be highly inefficient and distorted and that's class solidarity between the upper classes. Executives are mostly placed for the favors they can offer capital owners, not their "performance".
Making a mistake is not in-it-of-itself a problem. Mistakes are inevitable, if nothing else because people cannot be oracles. If you bet into the river because you have a flush draw, you'll lose around 75% of the time - but that doesn't mean it was a mistake in those 3/4s of a time.
If as a board you unduly punish executives when bets they make don't pan out, you risk causing a culture of fear that prevents innovation and big bets.
Obviously there's a limit, and the reasoning is important behind the bets.
That being said it's not like all of the tech ceos were perfectly competent - that's not what I'm saying. But the knee-jerk "well, fire them too" reaction from the internet is mostly an emotional response.
If the executives are "just human" then they should be paid like humans along with everyone else. They shouldn't have their cake and eat it too. If you get paid orders of magnitude more than everyone else, you should take on orders of magnitude more risk (including going to prison when the company breaks the law).
That's not really a correlation that exists anywhere else. A white collar office worker on average makes significantly more than a blue collar worker but they don't particularly take more risk or anything.
People are paid based on opportunity cost. Executives are paid very highly because the cost of them making a poor decision, or not making a good decision, is very high. Meanwhile, the cost of hiring me and me not performing to expectations is low. It's not because they're God's or anything. The supply of people with leadership experience is also definitionally low.
Of course there's a lot of old boys club in executive roles in reality but that's the boards and shareholders problem when they do a bad job.
I've seen a few 'old boys clubs' form, and the conclusion I've come to over time is that a large part of this is due to two characteristics. The first is that it's very hard to find credible talent. Think about the people you've worked with - there's probably 100+ or so of them, yes? Now think of how many of them you think are really exceptionally good. Probably only a few, even amongst people with the same role, and it likely took you quite a while to realise that. So, when you come to hire someone, you look at your network, because you've worked with a lot of people, and have opinions on who is and is not good. You simply have more information. The second is that once in a more senior role, it's much harder to judge whether a peer is doing a good job or not, because you don't see a lot of their work and you're likely more reliant on self reported state of world. That tends to weaken your decision making ability on the above, while heightening the importance of doing it correctly. Neither of those things are excuses, but they're certainly reasons. I think it's relatively straightforward to find incompetent executives who've wasted money and who are known for this.
A layoff doesn’t mean you over-hired for the market conditions which were present when the hiring happened.
And under-hiring today because your crystal ball says market conditions will deteriorate in the future is also not always the best course of action.
The myriad causes which lead Intel to this point exist at many levels from individual, corporate, competitive, and macroeconomic.
It’s overly reductive to assume a layoff is due to some mistake, that a layoff is due to over-hiring, or that a layoff’s root cause is the executives who mapped out a past hiring plan.
For starters, the hiring plan will be based on revenue projections which will be based on technical market analysis overlaid with a technical roadmap. This is a distributed effort and major analysis at the level of a corporation like Intel spread across potentially dozens of business units. The hiring plan could easily have been “perfect” based on faulty product roadmaps / product performance projections or any number of other factors.
The only exception here is them taking extra effort to keep dividends high. It is not like they were rolling is cash they don't know what to do with.
> Intel's earnings report for the first quarter of 2023 was one of the worst in the company's history. Its revenue dropped by 36% annually and the firm also posted a loss per share of four cents. These losses came as the firm ensured that its investors were happy and paid $1.5 billion in dividends out of pocket during Q1, keeping the payments nearly similar to the year ago quarter's figures.
The management team believes this is the case. They have a lot of information on the company and individual performance. Do you have any reason to believe they are wrong with this particular choice?
I would counter that this suggests the management team believes layoffs will be beneficial to management.
What is beneficial to management may or may not actually be in the best interest of shareholders (and neither incentive necessarily aligns with the interests of either customers or employees).
The dividend keeps the stock price high, which is good for both shareholders and employees. Cutting employment is how you manage to pay the dividend when you losing money. Not paying the dividend would crash the stock price and make lots of things harder.
If you believe Intel will be profitable again in the near future then paying the dividend really does make sense. Unfortunately there have been lots of companies that thought that was true when it wasn't and the dividend is how they ran out of runway quick.
> If you believe your company will be profitable you should reinvest all avaliable capital into the business to grow it.
No, because being profitable doesn’t mean marginal profits from expansion are available. Your plan would have all profitable firms expanding until they collapse from overextension.
> Did they make a mistake when they were hiring or did they make a mistake now when they are firing?
You cant believe both simultaneously.
No it's entirely plausible that hiring then was the right decision and firing now is the right decision. There's no universal law that says you must hire people for eternity.
Facebook literally fired people they hired a week prior.
Why do you feel the urge to make excuses for managerial incompetence.
Like when you are a worker, they must be scruitinised to make sure they arent lazy or incompetent, but the day you get promoted to executive you gain godlike immunity from criticism
It’s not up to you to decide if what the management did is right or wrong, it’s up to the shareholders. They own the company and they appoint the management. If they make bad decisions it’s up to them to replace them.
They do it indirectly via the board of directors, they are the representatives of the shareholders (akin to a representative democracy). It is a common scenario for the shareholders to vote in a new board to replace the existing management.
Maybe. There aren't a whole lot of companies who need chip designers (well, who are hiring chip designers; I imagine one could make the case that there are companies out there could do a better job with it).
The curse of being in a small industry (in terms of companies, not revenue). On the other hand, with AMD having a good couple years and multiple companies flirting with RISC-V, right now might be one of the better opportunities to find such a job.
AMD I am worried about, should they not embrace RISC-V, which so far they haven't shown signs of.
They could show up with a RISC-V for a new socket AM6, called Zen7, with x86 acceleration: An actual x86 mode to support legacy applications during the transition to the best and industry standard ISA.
Or they could, alternatively, fall into irrelevance on the CPU side. Which would be a waste.
The term over which to maximize profit can be subjective. The present value of future profits is also subjective. I think the answer appears to be “follow then industry trends set by Serious People” and “pay consulting firms to justify the actions I want to take”
Ah what a world we have constructed. Those with money do nothing to keep getting more money, while those that do the actual work hardly get any consideration. Got it.
And a glorious world it is. We had to go through millenia of chaos and violence before we found a system which can channel greed and status and power seeking into something mostly productive.
> No societal consensus believes itself to be cruel and violent and chaotic
Plenty of ancient civilisations celebrated their cruelty and capacity to deal violence as a competitive advantage (e.g. the Spartans, Vikings, Nazis, Mongols and Aztecs, et cetera). Even contemporary American society celebrates its military power. (No civilization celebrates its chaos, almost by definition, as that’s the antithesis of statehood.)
You're describing events against which there has been massive, in some cases politically upheaving, backlash. That's not the same as a core cultural tenet.
Yep that's sort of what I mean. Cruelty is something inflicted on the enemy and the other. Cruelty inflicted on the citizen is systematized or justified, and does not read as cruelty in the "view from within". And especially in the "view from the top".
But most of them are very cruel, within and without.
> Cruelty inflicted on the citizen is systematized or justified, and does not read as cruelty in the "view from within"
Spartans, Nazis and Aztecs were proudly cruel to their own. Hyper-masculine societies have historically celebrated this as a way of culling the weak from their ranks, a necessary evil. If anything, not being an honour-bound and sacrificial culture is something of a modern phenomenon.
I am comparing child sacrifice to the externalities of a dividends-driven system. We may not kill our children with knives, but we certainly let them starve.
> We may not kill our children with knives, but we certainly let them starve
This is hyperbole. We have hungry kids in America, and that's a tragedy. But they're not dying en masse, and we're certainly not celebrating that as a necessary sacrifice.
Neither were the purported child sacrifices dying en masse in Aztec civilization.
We absolutely celebrate the slow death of the poor as a necessary sacrifice in the face of economic growth and dividends. Just not always in the same breath. The fittest grow and the weakest adapt, or don't. Believing that when they don't is a tragedy, is not an effective way of mitigating tragedy, and indeed can serve as an affirming and normalizing act in and of itself.
This is a single metric. Number goes up. What other numbers went up? What numbers went down? What do these directions mean?
It does seem like fewer child deaths is a good thing. It does seem like modern medicine in general is probably a really good thing. There are a lot of other things in this world that are good things.
I'm not trying to deny goodness here. Just asking for more perspective, to better mitigate hubris.
I would guess that maybe less than a third of the total workforce is doing things we actually want and need as a society, and 90% of that third are jobs that are close to being automated.
As one example, the US alone has nearly $300 billion a year in revenue for the advertising industry and employees a quarter million people. When looking at the list of things humanity needs, ads aren't very high. There is a lot that exists to facilitate the other shit that doesn't need to exist.
point of clarification: people have value regardless of their profession and regardless of whether it becomes automated
I think the earlier post is considering capitalism as "more productive" than acquiring riches and resources the old fashioned way: killing your neighbors or cousins and taking their stuff.
The world bank! That classic charitable organization that definitely does not make predatory loans to poor countries and force them to privatize their industries
internally, the united states is very chaotic and violent.
and the united states has caused a ton of chaos and violence throughout the world. arguably they're one of the main causes of instability in a lot of countries.
The US has made some questionable choices, but here I'm talking about not only the US, but Europe, Oceania, Japan, South Korea etc. As a European though I'm eternally grateful that the one country to become the global hegemon was the US. I don't think the world realizes how lucky it is. Might sound like a fanboy but there's plenty about the US I don't like, moved back home because of those things even, but you have to look at the bigger picture here.
I could write you a book on this. But let's just say the "alternative" is all in attitude and what we care about in society. The person I responded to literally just says "well the corporation only exists to give profit to the shareholders!! that is their legal obligation!"
As if that is some kind of fact of nature?
That is a debatable topic. As in- SHOULD that be the case? The older I've gotten the more I realize we are taught all of these constructs and never to question their actual intentions.
What is the intention behind the construct of a corporation that the primary responsibility is to give back to the shareholders? Green & rewarding people that already have money.
Why can't the main intention be a company to given stable employment to workers and adequate rights? To pay reasonable taxes on your profits to give back to the welfare of society?
But no.. we have a system in place here where a company is basically not required to give paid sick leave, no maternity leave, limited healthcare, zero paid time off, no sort of retirement/safety nets, no guarantee that you won't be fired the next day and have zero severance.. etc etc etc
Everything that's wrong with not helping people in our society is all intermingled right now. We need to increase taxes significantly on corporations and the wealthy. We need to guarantee healthcare, early childcare, significant maternity leave, paid sick days, vacation, way more higher education assistance.
Then even if corporations get to continue to be more greedy, at least they are paying their share and have to provide way more benefits to people.
Now since we are on HN- someone is going to say "Intel and X tech corporation do that!" And hey, fair enough they do a lot of that. But you know what? They are giving benefits to the people WHO HAVE MONEY! We are literally in a society where the people with the best benefits are the ones who make enough money where they could manage without them.
Yet most of the workforce that does more random jobs are the ones who get screwed with basically no benefits while making shit money.
Long story short? It's all connected and so much needs to change. But I have little hope any of this will in the US.
Do you think the financial system has not changed in the past 150 years?
Just withing Capitalist countries. we have tried like 4 or 5 different forms of capitalism.
When eneconomic growth was highest in US history, college was free and share buybacks were illegal. 40% oftax reciepts were corporation tax. (now <10%)
Corporations exist as a privilege granted by the government as protection against certain liabilities that would discourage individuals and groups from doing riskier things all the way back to the charter days. The meme of 'it exists to return money to shareholders' is reductive and sounds propagandistic. What purpose an organization turns it's work to is up to the people who make the decisions, and varied.
People are entitled to setup a company with any aims that they wish. In Intels case, as with many other businesses, investors have bought the shares in an expectation of the maximum possible return on investment. Delivering this is also the responsibility of the board as enshrined by law.
In US corporate law, a board of directors are elected by the shareholders to represent their interests. The shareholders overriding interest is maximising return on investment.
The extent of US corporate law is that directors have a fiduciary-like duty to maximize shareholder _value_, but also that they must act in the best interests of the company. Statements beyond that are not reflections of law, but of faith.
A couple salient points:
The "best interests of the company" need not, and often are not, simply maximizing quarterly profits, share price, etc. Indeed, sometimes these things are odds with one another.
Moreover, shareholder value includes but is not limited to return on investment. It is simply most convenient _from a managerial perspective_ to simplify diverse shareholder notions of value down to the most legible lowest common denominator.
The folks who are downvoting you need to google "board of directors liability". If the Board doesn't act in the benefit of shareholders, they'll get sued to oblivion.
Let's reductio ad absurdum our way through this, shall we? If what you say is true, then during the run up of Bitcoin, any corporation that didn't lay off all its employees and use the money to buy as much Bitcoin as possible was violating their fiduciary duty to maximize return on investment, right? Or maybe every corporation should turn itself into a casino or pornography producer since those are quite profitable endeavors, right?
> Delivering [the maximum possible return on investment] is also the responsibility of the board as enshrined by law.
This is utterly and completely false.
If you don't believe me, here's what Justice Alito (known for his conservative/libertarian bent on the court) had to say in the Hobby Lobby opinion: "Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.
Sure, it's a privilege, but the privilege does not exist for the benefit of its employees.
> What purpose an organization turns it's work to is up to the people who make the decisions, and varied.
Just because they can do certain things does not mean it's ethical. Employees themselves are agents, not principals - employees making decisions to enrich themselves at the expense of actual owners is highly problematic from an ethical standpoint.
A lot of people in this thread seem to be confusing the fact that employees acting for the benefit of shareholders is not strictly enforceable and the benefit itself does not have to be monetary in nature with the idea that employees can do whatever they want with the power that they have. This is simply not the case - sure, employees don't have to maximize for the short-term profits or stock price, or even in some cases, companies can be mission-driven, with a long-term mission that's prioritized ahead of profit-maximizing.
None of this means it's reasonable to make a decision to hold on to employees for the employees' benefits, rather than the corporation's benefit, except to the extent that it helps the long-term mission of the company.
A stronger onshore chipmaking industry could be one thing. There are plenty of other reasons individual shareholders might have to park their money in one place as opposed to another which don't simply have to do with maximizing returns. People have ethical considerations, ideological considerations, patriotic considerations...
The purpose of Intel is to manufacture chips. Selling them to make money allows them to reinvest to make more chips. Offering shares on public exchanges raises funds to... you guessed it, make more chips.
If the only true end goal of every corporation is to make money, then eventually we would eventually end up in a financial shell game where money is shuttled around ledgers while nothing of value is created. (Yes, I know.)
> If the only true end goal of every corporation is to make money, then eventually we would eventually end up in a financial shell game where money is shuttled around ledgers while nothing of value is created
No, we end up with Intel manufacturing chips (in order to make money). If Intel becomes unable to make money manufacturing chips, I guarantee they will stop doing it.
'Making money is necessary but not sufficient to explain the motivation.
“I do not expect to join any company which is simply a manufacturer of semiconductors. I would rather try to find some small company which is trying to develop some product or technology which no one has yet done. To stay independent (and small) I might form a new company, after a vacation.”
Noyce and Moore incorporated their new venture on July 18th and made a commitment to continued innovation a fundamental component of their company’s culture.'
I don't see anything in your quote or link that suggests that Intel was anything but a money making venture. To "develop some product or technology which no one has yet done" makes that pretty clear to me. And they didn't stay small either, now ranked 46 on the Fortune 500.
By the way, Gordon Moore was worth an estimated 7 billion when he died earlier this year.
Sure, it’s up to management. Management here decided that layoffs and a buyback were the right call. If you think you know better than the people who run the company, please share.
Alternatively it also means Intel's management isn't inspired enough to make use of human and physical assets. As an investor, I'd take it as sign that they think they're done, packing up assets and becoming a lower sized structure. Maybe buying some goodwill in the markets for future opportunities. Buy let's face it: TSMC has won that winner-takes-all market.
Kodak should have laid off every single person working in film development and pivoted hard to digital sensors, but for a variety of reasons, decided that they were done in that market, so they kept paying people to make better disposables.
Not saying they would get there, but Sony makes c.$2bn a year in profit there, so realistically Kodak could still be a multi-tens of billions of dollars company if they had done that.
Kodak had already become an accounting control fraud by that time. It's just that the absolutely insane profit margins on film masked the utterly corrupt senior leadership. It wasn't digital that killed them, it was corruption.
That's interesting, I'd never heard that before. Do you have suggestions for what to Google to turn up articles? I'm just turning up more recent issues and some smaller-time stuff.
Did you know that they were the technology leader in digital? A Kodak engineer invented the digital camera[1]. They were first to market with a self-contained digital camera. Kodak had the best inventors in the business and numerous foundational patents on digital photography. You sound like someone repeating a just so story you heard nth hand for some large n. My information comes directly from the participants. It was absolutely managerial corruption and not a lack of technical ability that tanked them. And that's where the real lesson is to be learned.
Would you believe that they killed the digital camera because they saw themselves as a film business, not a camera business?
The cameras were a loss leader to sell the film.
Seriously, here's the 1999 10-k self description (cameras is second to last only ahead of projectors!):
Kodak manufactures and markets various components of consumer imaging systems. For traditional consumer amateur photography, Kodak supplies films, photographic papers, processing services, photofinishing equipment, photographic chemicals, cameras (including single-use) and projectors.
My point is that if Kodak saw the writing on the wall that film was out and sensors (notice I didn't say cameras anywhere in any of my posts) were in, they could be in a position like Sony is right now.
It's honestly amazing that all those participants didn't know that very simple fact when Kodak management constantly talked about it at the time. Maybe that's why they blame 'corruption.'
EDIT: Maybe to put it another way, Kodak didn't see themselves as rivals to Nikon or Canon (you could put Kodak film in those), they saw themselves as rivals to Fujifilm.
Corporations in Germany have governing boards with equal representation for shareholders and employees. It's a much better system and should be adopted by the US, i.e. encoded legally.
While I also think it is a good system, it should be noted that the capital side has a majority in any vote. So if the representatives of the capital side agree on an issue they can always ensure they get their way. Furthermore, at times employee representatives are targets of direct or indirect corruption. So there is definitely room for improvement.
And yet, looking at a list of the top 10 tech companies in the world (by market cap), not one comes from Germany. The top seven are all from the US. Only one from Germany in the top 20 - SAP at #17, with a market cap of less than half of the #10 company.
Who said this is the right metric to use? Maybe you should be looming at productivity or innovation.
I gave my own metric, biggest parasites.
Looking at the top 10 tax avoiding, etm, sorry, minimising organisations, the top ones are also from the US.
Why should I support the biggest and fattest freeloaders?
I pay for roads and police, Starbucks just uses them and pays zero tax. And the coffee is shit.
They don't even have excuse of 'innovation' like google does. If Starbucks HQ gets nuked from orbit tomorrow, the world would just lose a parasite. They would be replaced by mom&pop coffee shops overnight, and they would pay tax and make better coffee
Pretty sure Starbucks, its franchisees, and affiliates all pay state and federal fuel and payroll taxes, and state/local sales taxes. When they own a location they will also pay state property tax; if not, their landlord will pay that tax with their rent.
The fuel tax is especially relevant insofar as it’s explicitly meant to be a direct fee on the users of the roads to pay for the roads. Their drivers and those who contract for them in logistics will also pay for licensing, registration, and tolls.
There’s a variety of meaningful discourse to have on the proper tax structure for Starbucks… but representing them as freeloaders on the roads and the police does not belong as part of it.
Well, the US outperforms Germany on productivity, innovation, and GDP / capita as well.
Pretty sure that if there were no businesses, there'd be a lot less tax revenue as well.
And given that Germany spends way, way, way less on defense than the US, and has been protected by the US from the Soviet Union & Russia for many decades, I think "freeloaders" is an interesting term to choose.
You are missing the point entirely. I am not comparing entire countries, just the companies and skill of their management.
To make my point clearer, lets replace Germany with Kazahstan.
Lets say we are examining if Starbucks management is more or less skilled than some random coffee company in Kazahstan.
Revenue per customer in USA will be higher. Sometimes workers in Kazahstan could be sick because there is outbreak of the literal plague and that will hit revenues.
Could you replace management in Kazah coffee company with American management and achieve the same results as in US?
Does the great skill of American management prevent outbreaks of the plague, or stops mafia from raiding your corporate office? No, in Us management doesn't even have to think about these kind of issues.
If not, then lets not assign the entire success of American society to corporate upper management?
There was a time plantations existed for black people to work on them. Not arguing working at publicly traded companies is a “modern-day slavery”. But it’s not inconceivable to me that the nature or corporations(and society) can change over time. The workers can demand it.
Even if we assume a system that doesn't give a shit about human beings, there's nothing efficient about overhiring, then having to lay off workers already past the initial curve of how to work in the company. There's a fair amount of inefficiency in a cycle of layoff, hire new, wait out their acclimation ramp up.
Hindsight is 20/20, though. The narrative from the company isn’t that “we purposefully overhired and are now laying the excess off for fun”, it’s that they believed they would have use for the excess given the trajectory of the company and the overall economy but they were mistaken. Which is not particularly strange - the future is famously hard to predict.
There is also genuine benefit to overhiring and then laying off laggards: interviews aren’t perfect, and you can find hidden gems by taking risks on unconventional candidates.
I agree to a certain degree, but not when "Speculating As Much As 20% Workforce Reductions". They have tools like taking advantage of natural attrition.
Note that the 20% workforce reduction is within one relatively small portion of the company. IIRC, this is also the portion of the company that works on the Intel branded servers they were somehow still building in 2023. They are finally exiting that business and those workers are redundant. What would you have these workers do when their entire reason for being hired and employed no longer exists?
They are not returning money to shareholders, they are artificially inflating the stock price through short term band aids like dividend. If you are suffering an existential crisis, you try to invest all you can in positioning yourself to be successful in the long run. If I am an investor, and I am, I want long term return on the full value of my investment, not a $1 dividend on a stock I bought for $40, which is not worth anywhere near it now.
This is the same nonsense Pat's predecessors did, laid off long term experts in manufacturing & design and replaced them with fresh grads. And see how where we are.
Sorry, you don't appear to understand how stocks actually work.
The market cap of a company is an estimate of its value. The value includes things like current assets, expected present value of future profits, and so on. If it pays out $X, to first order effects, investors have $X more money, the company has $X less in assets, and so is worth $X less than it was. This is literally a redistribution of current market value back to investors.
At the level of a stock, the result is that a dividend of $Y will normally DROP the price of the stock by $Y. This is the exact opposite of "inflating" it.
Now I said to first order. What would be a second order factor? Well a large part of the value of a company comes from an estimate of the present value of future returns. Paying a dividend is literally an admission on the part of management that they do not think that they can spend the money and get returns matching other investments (ie the stock market). And therefore it is in the interests of investors that the money be returned. If this admission comes as a surprise to investors, this may change expectations of the future and drop the stock price even further. But unless the money being returned is from an unexpected windfall, the second order effects are unlikely to be positive either.
As an investor you should rightly see the fact of the money being returned as a bad sign for the future. However if you understood the chip industry deeply, it shouldn't come as a surprise. Your theory and preference appears to be that Intel should roll the dice on a Hail Mary to have a chance of a revival that keeps your losses from being permanent. But given the headwinds that they face, returning money and winding down operations in an orderly fashion may well give the best possible returns for investors. Which is what management appears to have concluded.
Hence return money that they can return, cut overhead with a layoff, and expect more of the same going forward. Anyone who invests in Intel expecting them to do anything else is probably throwing good money after bad.
Semantically, sure, they are giving money back but the OP has a reasonable point that a dollar given back today may ultimately cost far more than a dollar in lost future returns.
Management should give money back when they do not think that they can generate future returns with it that are worth more to investors than the money. If management is right, then attempting to keep the money is taking value away from shareholders.
Given my knowledge of Intel's situation, I believe that management is making the right call here. We've known for decades that CISC based architectures don't scale as well. For a long time Intel compensated by investing enough to be able to iterate faster despite their advantages. But now ARM has taken over mobile, and is moving into data centers. Intel lost, they can't invest enough to overcome their innate disadvantages.
This isn't news, but there is a huge chunk of x86 out there. Unfortunately they've lost their moat on that to AMD. AMD now has better designs and more money to put into research. AMD also has outsourced manufacturing to TSMC, which (because they also build lots of ARM devices) has better economies of scale and manufacturing than Intel can hope match. And even if Intel tried to copy AMD here, there is a long learning curve to working with outsourced manufacturing that Intel would have to go through.
The result looks pretty grim. There is not one area in which Intel has an institutional advantage. And there is every reason to believe that Intel is not long for the world. Therefore extracting maximum value from current assets is probably their best management strategy. Rather than engaging in wishful thinking about a return to their former glory.
In the U.S. corporations exist for the purpose of providing limited liability with respect to common investments in a business activity. (The original British concept of corporations did not provide for limited liability for shareholders, see e.g. Lloyd's of London.)
It was only in the past few decades that a political ideology decided that corporations were about maximizing shareholder investments to the detriment of everything else.
Limited liability with respect to investment in a business activity is the sole original reason for the corporate form, as you don't need a corporation to pursue a mutual business activity (that's what Partnerships are for).
It's a "dumb" article, but your reasoning is inline with it.
The problem with many of your "unneeded workers" is that when they become needed you can't flip the switch and they'll appear grateful for the bread you throw at them.
See service industry after the Pandemic, now extrapolate for highly technical jobs ( even the sales ones ). And also it's not like these people have gold fish memory, they remember, and adjust accordingly.
On the other side, Intel can't/shouldn't simply cancel the dividends because those 1.5B "saved" would cost them multiples of that since investors wouldn't buy their stock and many would sell - cutting their already big losses - So for Intel, capital would come only from the banks and the rates aren't exactly 0% now..
This is yet another example how Intel "star" execs ( and the board ) should have been competent 10 years ago instead of riding the wave. Now Intel is in a very tough position and it's really "no ones fault" of those who are there now.
> Corporations exist for the purpose of returning money to shareholders, not for the purpose of permanently employing unneeded workers.
'Let them eat cake'.
There is a pov that societal interdependence is a fact, and that means that societal actions must ultimately be benefitial to the society at large.
This point of view can then hold that liberal market economy is a good thing because it promotes and engenders productive social activity (induced by economic self-interest) that then results in greater societal well being. So here the "economic self-interest" is the frosting on the cake: the cake is "productive social activity". So we in the liberal West go and congratulate ourselves in that our 'greater good system' is also 'better for the individual' as well. It's great!
But, some in our system do not hold to the view that societal interdependence is factual, or even if it is, it is desirable. To them, the cake of our system is "economic self-interest" and the societal well-being thing is, frankly, a nuissance, a "cost of doing business".
Companies certainly have to make money, the more the better, and your description is not technically wrong, and yet short-circuits.
Nobody in any productive and creative activity has dollar signs in their eyes. It's about building, creating, optimizing, allocating and yes, also removing. At least some part is long-term (certainly longer than the reporting interval of a "quarter"), and positive contributions compound. Alternatively you can just withdraw, and eat the seeds now - stock market and executive bonus agreements would reward that, and that's the mentality that cannot create.
The sense is that those formerly exciting companies are a little lame right now, and maybe lack the right visionary leadership? Why does the new AI boom not create excitement for Intel, to make chips for AI or to use AI to make chips or w/e. The sentiment is a disappointment in the tech sector that had been good for so long.
Yes they absolutely lack the visionary leadership. Problem is that the first CEO of a successful company gets there by being a good CEO. The 2nd through last CEOs get there by being good at office politics.
Cool cynical take, bro. It's almost like rashly hiring a lot of "unneeded workers" and then firing them is an indication they won't be able to return money to shareholders.
German companies of a certain size have to have worker representation on their boards. Since Germany is perhaps one of the world's leading economies and hasn't been destroyed by not only returning money to shareholders, there is, at least, a viable alternative.
But please continue to embody why we can't have nice things.
Not even a cool cynical take. It fails to take into account that Intel has taken tax incentives for providing jobs. They might be justified in what they're doing here and it might be mostly unrelated to these tax incentives, but they certainly don't have zero obligation to provide jobs. https://subsidytracker.goodjobsfirst.org/parent/intel
Why do you think the workforce who generated record profits for Intel only a couple years back are suddenly "unneeded"? That's just reflects the dumb decisions made by the leadership. If anything the CEOs and upper management who made those bad decisions and still taking millions in bonuses should be fired.
How is the previous revenue relevant? For a rational company, workforce is needed to increase revenue in one way or another. If the company is rational and wanted to increase their revenue, why would they decide to lay them off (and incur additional expenses)?
It's relevant because it proves that majority of the workers are competent. If you are not able to succeed with a competent workforce then you're just a bad CEO/leader and should step down.
Also it's wrong to assume companies are rational. If you are constantly in a cycle of hiring and firing employees, then it indicates you have a no long term vision and no skills to navigate the market.
How does it prove it? Why the same logic doesn’t apply to the upper management, they were at the company when it had record profits. So they are competent enough to recognize that certain efforts are not needed anymore and it’s time to cut losses.
Same logic does not apply to the upper management because they are not directly involved in generating value for the company. Elon Musk is not out there writing code, Tim Cook is not assembling iPhone or even designing it. Telling someone what to do is not even close to the labor of person actually doing it. And when the "upper management" makes bad decisions and results in huge losses, bottom rung employees are the first one to go.
You are saying that they are not directly involved in generating "value" and then saying that bad decisions result in huge losses. That just doesn't compute. And how do you know that laid off people "directly" involved in generating value? E.g. many (most?) recruiters are awesome, but there's not much value to generate when there's no hiring.
If layoffs are the result of bad management, does it mean that there's no good management in tech, since everyone is doing them?
And holding onto unneeded workers is an actively anti-social thing to be doing in a tight labor market! The whole "corporations are good insofar as they provide jobs" thing was contingent on the Great Recession-era macroeconomy.
It’s not like Intel is miles ahead of the competition. Even if you believe that layoffs were necessary, the money should go into R&D unless Intel believes it’s so incompetent that it can’t find a better use for the money.
Capitalism is supposed to help the people via efficient allocation of resources, not make money for a select few. The original goal of any economy is to enable specialization and still provide for the basics. People aren’t just workers.
> Capitalism is supposed to help the people via efficient allocation of resources, not make money for a select few.
I am far from convinced this is even a goal of capitalism, much less the goal. There is a reason it trends towards monopoly.
While I violently disagree with the moral position of the GP's post, I think their mentality is much more closely aligned with a working definition of the thing, which is to optimize for output of material wealth, while allowing individual people to benefit from private ownership of the means by which that wealth is created.
At no point does the concept of "helping people" enter that definition; it only "allows" people to help themselves, if they can, within the limitations of a framework that compounds generational and socioeconomic success (and thus, already have some degree of "help" to stand on).
> The original goal of any economy is to enable specialization and still provide for the basics. People aren’t just workers.
I'd add some nuance here. The goal of any economy is to enable specialization towards the goals of the drivers of that economy and provide the basics for people who enable those goals. Not for people in some holistic, humanistic sense.
And under capitalism, since that goal is production of capital, those people are absolutely just workers, except for the owners of capital, and the ones who fall out of the machine and become so many loose parts rotting on the floor.
Well, I'm not a capitalist, but the story they tell is that it's there to efficiently allocate resources to help good old American families, or some bull like that. I'm tired of the lies, is all, and would like if the reality were aligned with the story.
Huh? The one and only goal of capitalism is to accumulate as much capital as possible. The best Capitalist are the ones most effective at extracting value from humans and transferring it to the non-productive Capitalist.
Effective allocation of resources means firing people that are not necessary for the company.
Also “people aren’t just workers” might be true in general sense, but for the company they are exactly that: workers. Their private lives are not the company’s concern. They shouldn’t be. The thing I hate the most is when my employer tries to take care of my wellbeing outside work. I consider that invasive of my privacy.
I'd recommend reading about stakeholder capitalism. E.g. "Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet" written by the founder of the world economic forum.
Realizing that a business has more responsibilities than just satisfying the shareholders is incredibly important. I honestly just listed it as an example, there might be better books. I only had brief look at this particular one, since I got the impression that most of it's content is common sense here in Europe...
I’ve read lots about stakeholder capitalism. It’s a bunch of nonsense.
If management is beholden to a bunch of competing groups, then in any given situation they can do whatever they want and justify it by saying “well yeah the shareholders (or whoever) don’t like it, but this is what we need to do for the sake of the employees (or whoever).”
I’d rather have the shareholders in charge than unaccountable management doing whatever they feel like.
