Intel financialized and lost leadership in semiconductor fabrication (2021)
ineteconomics.org
ineteconomics.org
You can see the rather large change under Gelsinger: https://ycharts.com/companies/INTC/stock_buyback
Not many companies recover like this. Microsoft is one notable exception - and they recovered because they have a huge cash cow, and that gives them a tonne of runway.
However hiring Elop, with the contract bonus clause to sell Nokia Mobile, was a really dumb move.
Intel also have huge cash cows in x86 market, for at least another 5 - 8 years.
> Intel has also long preached the perils of solder TIM, which can lead to shorter lifespans due to microcracks in the solder TIM that form during heat-induced expansion and contraction.
It's not just about "cheaper solution". Yes, solder will be best for an overclock but that's not the primary objective here.
As they say, good engineering is about optimal tradeoff between every aspect of your product. That includes cost (directly, we are responsible for it) and customer happiness (indirectly, since in a giant company, that gets handed off to the Marketing/PR team). These can get out of sync.
Here is some public information about PTIM: https://patents.google.com/patent/US20150279762A1/en
I'd love to dish, but there is no simple and salacious story to tell, and it's too soon to talk about it anyway as far as I am concerned (and I imagine their lawyers agree). I do think the emergence of high-margin software companies as providers of mostly high-pay, low-stress jobs (and thus magnets for sharp and motivated engineers or aspiring engineers) was one of many contributing factors. I'd tell you how process engineers in the most critical areas used to work, but you'd never believe me.
Are you implying Intel's margins weren't high enough for it to compensate its engineers well or provide better working conditions?
Intel was very clear that it was not willing to pay top dollar not because they didn’t have the money, but because top technical talent tended to resist or reject Intel culture. This meant the big bucks always went to management and other enforcers of said culture.
In 2021 Pat Gelsinger told HR to increase pay to match market in an attempt to stanch the attrition. The problem with this is that Intel management didn’t try to fix the broken culture, and instead propped it up by handing the new cash over to the “critical talent” that again, were the cultural enforcers. Pat G genuinely believes Intel is the greatest company on the planet, so he won’t see this as a problem.
There are some things that money can’t fix.
Please share! I've worked in the games industry, I'll believe anything :-)
Given the stories I've heard, I don't think anyone can compete with the gaming industry!
Selecting desktop processors over mobile processors as strategy. Basically a double-down on what had always worked rather than paying attention to the signs of the market.
We've all heard the story of Steve Jobs asking for a mobile processors for the iPhone and being shutdown by Intel management. I knew a number of Intel engineers and managers who were pushing the mobile path in 2009-2011 even after the iPhone showed that mobile was the money maker. When push came to shove, those Intel engineers got shutdown hard and most of them left Intel. When the evidence in your face is ignored and all you hear is "stupidity" - the non-masochists get out!
I used to work for Intel so seeing it collapse like this roll out as a slow-motion tragedy has been sad. But that's also been true (for many of the same stupid management/strategy reasons) of Hewlett-Packard for whom I worked for 10 years when Bill and Dave were still alive. Leadership matters. Probably more than anything else, even technology know-how.
One of these days the demise of Intel will be taught in business schools as a case study of how to destroy a tech company from within.
My takeaway is that working hard to build quality products is more likely to be profitable than working hard to make money.
Maybe true, it's business profitable, successfully extracting money from airlines and government contracts.
No company is safe. Boeing is exactly the type of company that won't know they're dying until they are dead.
Yes, but they're in a sufficiently protected region of state space guarded by landscape difficulty, moats, massive contracts and cash flows, the government, you name it.
You can't just build a better plane from zero and immediately start taking orders. You have to start with something small, tangential, and then grow into that market. That's still very hard to do in aerospace because the requirement is "don't kill people" yet the problem involves putting people in mortal danger.
I don't doubt that it could happen, but I think it's a very tall order.
A few years ago, Bombardier introduced a new plane, the C-Series. Even though it did not immediately compete with Boeing's own offering, Boeing successfully lobbied for an extravagant 300% import tariffs to be be applied which killed the primary market (US) for it. Canadian government folded and essentially gave the otherwise technically successful project to Airbus in the hope of salvaging any industrial returns on eventual mass production. The airplane is now known as the A220.
Any would-be competitor will not only be fighting Boeing, but the whole US government.
Doesn't this violate NAFTA?
> On 10 January 2018, the Canadian government filed a complaint at the World Trade Organization against the US.
> On 26 January 2018, the four USITC commissioners unanimously determined that US industry is not threatened and no duty orders will be issued, overturning the imposed duties. The Commission public report was made available by February 2018. On March 22, Boeing declined to appeal the ruling. While the USITC had determined there was no threat, the ruling came too late for Bombardier, as the dumping petition by Boeing had already paved the way for Bombardier to relinquish a controlling interest in the CSeries to Airbus in October 2017.
This is just a repeat of the Avro Arrow story. US demanding free trade from everyone and then just bullying its weight around when someone comes along with a better deal than what they can manage.
And ... Putin has a significant aviation industry. For a while they were the only country able to launch humans into space. And as far as I know, they're flying MiGs in Ukraine.
But my comment was really intended to say that the "freedom" we are supposedly entitled to is actually a gift, with limits, and there are few better ways to discover those limits than to threaten a very large company.
Brand loyalty takes a while to fade, there seems to be a cycle with a large number of successful companies that goes
work honestly to build a good product
-> generate brand loyalty
-> people with integrity get replaced by people who would have had no chance of building that successful product/company in the first place
-> cut as many corners as possible while riding the brand loyalty to more short term profits
-> eventually, on the scale of decades sometimes (because people take a /long/ time to realize that 'well known brand' !== quality), get out-competed by a small company building the same thing as you with integrity
-> return to step one with new company.
But there has been at least 1 good printer, and HP made it: - https://en.m.wikipedia.org/wiki/HP_LaserJet_5
Also, 9-pin dot matrix printers were workhorses.
At home I have an Epson ET-M3170, it's not a laser but one of those epson thing where you don't have cartride but just empty bottles of ink into a tank when it's empty, and it works great too (it's much slower, but then again it's a lot cheaper).
It's mostly inkjet printers that are always terrible.
Those things are tanks. Perform a maintenance kit on one of those, and it's good for another 150k pages no problem. The main thing that needs attention is the rubber feet that pick up the paper get dry. Some rubber rejuvenator on a q-tip goes a long way.
I have a 4050 for home, and I have no reason to doubt its future longevity. :-)
The firmware, though, is ancient (telnet, and a web interface that requires IE 5 IIRC). Now if there was open source firmware for these things...
They also made some great RPN calculators.
Then they killed off the calc division, not because it wasn't profitable, but because it wasn't as profitable as ink. Years later they decided to upgrade the calculator (TI had won the market in the meantime), instead of doing something innovative they bought a new arm chip and ran an emulator of the old chip and used the old software stack with minimum polish under the emulator. Not surprisingly Texas Instruments laughed all the way to the bank.
Their laser printers were starved as well, again not as profitable as selling ink for ink jets. So the print engine was killed off and now uses the same print engine that you get in a Dell printer. Which was sad, they weren't nearly as durable.
It was sad to watch
Tie their compensation to real goals and require them to hold for the next 10 years.
Perhaps people who are interested in building great companies, like the regulars of a tech startup-centric forum
It would be much worse if the big incumbents all remained at the top and dug themselves into the regulators and politicians and crowded out others (they already do to a great extent but it could be a lot worse).
Uncertainty and risk are big reasons why people fear change, I completely understand. I'm not saying the feeling or desire for stable incumbents is invalid, although maybe my comment could have been worded a bit better.
That's the sort of bespoke governance that Eric Ries' Long Term Stock Exchange is meant to enable and support.
- short term-ism leads to great financial results in the short term so the stock price goes up making a buy out expensive. Anyone that can see the internal issues will know it's not worth that price.
- very few groups can make an offer on companies as large as Intel and Boeing. Those groups are not known for deep engineering expertise.
- companies use poison pills and other measures to prevent take overs
You have more faith in public markets than I do.
When the board members taking their gains and re-investing them in other companies to then repeat this strategy.
Perhaps you could get a longer-term effect if you had another, lower tax level at 5+ years, or raised moderately the 1+ year cap gains rate and moved the current one to 5 years.
With that incentive severely reduced as your plan proposes, you’ll see much Miles’s incentive to hold and more volatile markets.
https://www.investopedia.com/articles/personal-finance/10151...
There's still an agency problem between the shareholders and board members, but at least the shareholder votes will be weighted for the long haul. Locked shares would have to be held in a way that prevents wrapping them in a salable derivative.
This would have a significant impact on encouraging long-term investing for investors and long-term planning for companies.
This should apply only to shares in individual companies and not index funds or mutual funds.
It would also encourage a shift away from short-term speculation and to long-term investing in great companies.
Where I live stocks profits are taxed at 20% at first, then 5% less for each 5 years you hold them, down to 0 taxation after 20 years.
Also, this kind of progressive tax reduction should only apply after the company is public. So the clock for VCs, founders, etc only starts at the time of the IPO.
This would ensure all the early stakeholders are also aligned in investing in the long-term success of the business.
Currently, these early stakeholders are more likely to be focused on cashing out and having a liquidity event.
Now it's in the interest of a CEO to take a performing company carve out the middle so profits go up in the short term, shareholders get more money, he gets fat bonuses and the company dies.
Though there were problems with the old style too - they became very conservative and couldn't adapt among other things.
Boards often want the same thing because members usually own stock in the company. Make a lot of money in the short term, pump that into stock buybacks, profit. Shareholders want the same thing - they often aren't looking past the next 1-4 quarters, they want fast returns.
Maybe that's the root of it and long-term capital gains should take longer than 1 year. The owners have a shorter horizon than employees!
If companies inevitable self-destruct from short-term management, that creates space for new companies to emerge with new approaches. Sure, there will be some noise/churn but overall I think it makes the overall ecosystem stronger.
The 1,000-year monopoly is a terrifying idea.
Very difficult to align long term incentives unfortunately, unless the company is founder led.
These are not what I would call super gains, they are definitely good gains, but they are what anyone would expect from a blue chip company like Intel.
So the point is this isn't people looking at the short term, this is a company that used a strategy to optimize growth over a 20 year period. Yes they hampered future growth after those 20 years, but this is a technology company, most technology companies don't even exist after 20 years. I don't think there is really any policy or attitude or anything at all you can implement to get people to maximize revenue over a longer period than 20 years, especially in a technology company. No one would invest in such a company because, because such an investment would be extremely risky.
The only way to prohibit this would be to cap the maximum size of a corporation. My guess is lawyers would just come up with some legal novelty to work around this in no time at all.
but that's the point of the early-enough forced bankruptcy - to salvage value and re-internalize the downside risk to owners only.
i'm totally down with limiting corporate size, not via a direct statute to that effect, but via a high-functioning antitrust department along with severely progressive taxes. you can get as big as you want, as long as you can internalize all the downside risk of being 'too big to fail'.
As it is, we keep some of these giant companies on life support for years or decades, allowing them to crowd out competition with their sheer size, while also failing to really produce good products that serve their customers.
Real world doesn't work that way. Real world looks much more like the deindustrialized parts of the UK or the US, or the collapse of Soviet economy after switching to capitalism. Companies go bust, taking the whole supply chain with them, workers are laid off and disperse. After a few years, the skills atrophy and the experience vanishes - you cannot put humpty dumpty back together again. More often than not, the workers stay unemployed, underemployed, or just cheat disability. In high-end consolidated markets like semiconductors or aircraft manufacturing, we're not talking about an infinite reservoir, it's a handful of corporations per continent
i’m totally good with throwing out the senior leadership and letting new leadership grow from within though. claw back their bonuses and golden parachutes too.
Take over, investigate, prosecute, replace corrupt management with people of integrity.
Basically, what the FDIC does with small banks that fail.
The US media furiously ignored it.
AMD is not the competitor they need to worry about.
The future will belong to manufacturers that can produce powerful CPUs that power a device for a day on a single charge, without needing fans for cooling (like what we see with the ARM-based M1 from Apple).
Low power/reduced heating costs will also be a big draw for cloud providers.
If Intel can't compete there they'll be in trouble.
It did catch up with AMD with Alder Lake, but it is also committed to very large R&D capital expenditures.
So anyone holding it hoping for higher dividends and more buybacks is dumping, which is pretty much everyone that bought it before Pat Gelsinger took over.
If they stay focused on the path they are on, they will turn it around. Anyone buying in now should be prepared to hold until 2025.
For foundry to be successful, they need one of the big clients - Apple, Qualcomm, Mediatek etc. If they find one of them, they'll pay for the fabs getting up to speed.
It's brilliant building up the gpu segment alongside. They are building internal demand, so they can be their own "trailbrazer" client for foundry.
There are supply chains disruptions. Some car manufacturers have been heavily affected by them. Some have not. Unless you think that these supply chain disruptions will continue for the next 20 years, it's bit too early to declare the firms hit by them dead in the water.
Intel’s downfall can be tied back to an org structure that made up for bad gate-level architecture choices with proprietary fabrication techniques. All that customization crushed intel’s ability to compete with TSMC in foundry and the lack of architectural discipline prevented them from even coming close to fast-following QCOM SoCs or NVDA GPUs.
Keep in mind, for all the talk of Intel’s bad management and over-financialization, BK was a foundry engineer and he oversaw the worst period of decline.
Except that it isn't.
"Manufacturing" has known limits. You need this many people to make this many things and your things sell for this much. There is growth, but the values are limited. And, if the company is dying, it is a very slow process and can still generate a remarkable amount of cash while doing so.
"Financialization" has no such limits. The sky is the limit and can do so really quickly. So, it looks great. Your gains can be close to infinite.
Unfortunately, quick and infinite can also describe your losses from "financialization".
This killed Westinghouse. It also crippled GE quite heavily. There are many other examples.
Speaking with no manufacturing experience, but having read some books (Diamandis' Abundance).
You can reduce long-term costs by automating. If each week you buy a robot replacing a human, your operational costs go down permanently. That is because robots are fundamentally cheaper than human time.
Of course, you have to foresee the demand that would make it possible to recoup the costs.
But ISTM that the thing with constrained environments like manufacturing is that the constraints are physical, so everyone is constrained, which means that in a highly competitive environment, all viable players should be optimising and striving to work on the edge of what’s possible, in order to maximise competitiveness and profitability.
So in such an environment, it’s absolutely necessary to “work hard to build quality products”, just to remain in the game. If you instead direct your resources to something else (like financialisation) at the expense of building great products then you will fall behind the leading edge and become uncompetitive or, perhaps worse, a commodity player.
This certainly seems to be what happened at Intel, and also Boeing, both of whom appear to have fallen well back from the edge of what’s possible.
I think the main reason financialisation is easier to do than engineering, is because money is a universal language, and Verilog is most certainly not. Shareholders seem to invest in order to make money from transactions, rather than dividends, and this seems to be a structural flaw in the financial system.
The current definition of a "profitable company" is all about the stock price increase.
The problem is that manufacturing has a hard, fixed, upper limit on how much you can manipulate your company. Your Thneed(tm) sells for $X--you can't dramatically increase the price per unit (barring monopoly status). You probably can't increase demand dramatically either. You can only reduce labor and R&D to zero. So, the maximum amount of cash you can earn is completely constrained and straightforward to compute. Your stock price has some relation to this and thus also has a limit.
However, if you switch to "financialization", there's no limits. You have margins. You have multiplers. Things are easy to hide and difficult to compute. The stock price goes gangbusters for a while and you have a great "profitable company". Then something goes wrong and suddenly the business needs cash rather than "financial instruments". Then the "financialization" unwinds and kills the core of the company.
The problem is that the "stock market" has become "lottery tickets" instead of "corporate ownership". People demand stock price increases even if the business is quite profitable--this means that "financialization" will always triumph.
I agree with all your other points though. The goal has changed from "running a good business" to "shareholder benefit at any cost". I don't think that's in the spirit of capitalism, somehow.
For big companies. For individuals it might not be the case. Hence why we see this happening.
This seems like a short-term vs long-term thing. You are often going make more money in the short term by chasing the money (e.g. financialization); but if you aren't careful you will undermine the core value of your company.
It's pretty clear that people have made many companies more profitable by this sort of approach, at least for a while.
In the long term. But in the short term, you can make more money by not caring about the long term. And given the way US CEO tenure has declined over the years, for a lot of execs the long term is somebody else's problem.
Over time lack of domestic supply chain becomes and security and economic stability problem, and domestic inflation rises after trade deficits grow too large, and various supply shocks occur etc.
It makes me feel like a sucker. Why am I even trying to create something when these literal sociopaths are making more money than me destroying years worth of other people's work? Maybe I should be like them instead. Why create when destruction is easier and more profitable?
"Manage the top line; your strategy, your people, and your products, and the bottom line will follow.”
-Steve Jobs.
Apple, on the other hand, has put up a bit of a fight. They bought out the entire 5nm node from under the rest of the industry, for better and worse, and then they changed the game again by putting the ball in their court (mobile chipsets). At this point it's hard to even say they're competing against AMD and Intel; the two are chasing entirely different markets at this point. When they do butt heads though, watching the sparks fly has been spectacular. Despite being on decidedly worse silicon and a veritably slower ISA, Intel has managed to refute every one of Apple's offerings with a decidedly cheaper processor. I really do look forward to their response to the M1 Ultra, because I feel like the chip wars have only just begun. With Pat Gelsinger at the helm, Intel has set a warpath through the industry, and their recent performance metrics seem to cement their intent on being the best in the biz again.
Godspeed to all you chip manufacturers out there.
Core design is astronomically expensive so given the opportunity to build only one core (or two in the case of big.little) it seems reasonable that Apple's perf/W would be superior since they have had a very pressing business need for it. Add on that they have so far been built on one to two nodes ahead.
The point being, I think if Intel still can't get close to Apple in 2-3 years then there is a bigger problem, but as of now I think there are still some reasonable explanations as to why their current products are behind that don't come down to technical inability.
Isn't TSMC building infrastructure out in Arizona? It might not be full featured but it creates a launch point for protecting a world wide asset. https://tsmccareers.com/tsmc-arizona/
At this point the only way out for us, from both iOS and Android, is if they both miss the next big form factor, maybe smart glasses and AR/VR. Basically, the next OS.
It is using cash as buy back while not giving enough budget to R&D or product improvements. Apple didn't do that. They invested accordingly and still had too much money and didn't know what to do with it. Although one could argue they could invest and bring even more value to their customers. But Tim Cook think those were better for shareholders.
Compared to Intel, they stopped investing in foundries. Partly because of their 14nm were over provisioned and partly because of their broad. Along with their 10nm failures. It really was a perfect storm.
Also, the CPU in the picture is upside down. Maybe this is a shallow criticism (especially since the picture was probably chosen by an editor), but I am reluctant to listen to people who would make such a basic mistake.
You have a source for this? It sounds fascinating.
If you want to hear the opinion of someone who is actually involved in CPU design, this is a ridiculously shallow take, and you should seriously recalibrate
I think companies have pretty clear life cycles. First they start, they grow, then the plateau, and then fall. Sometimes you may get a few bumps in the road, but generally this is the long-term cycle.
Financialization makes the most sense to engage when when you are plateaued and possibly falling. You can still extract value.
I think that the fall of Sears was a great example of the financialization and extraction of value of a dying company.
Financialization is trading off future potential growth or even long-term staying power for $$$.
But if extracting value makes things go bad, then it pretty much leads to a death spiral.
I feel like a more helpful framework is: if you're giving up on competing, then financialize, while recognizing that a) it's probably gonna kill your company, and b) value extraction from users [especially those who have little choice in using your products!] is no fun for anyone!
Even innovation powerhouses can eventually fall. Those that stick around often shed the business units that made them successful initially (GE). One good way to extend the life of a company is to acquire your eventual replacements before they get a shot at you.
Business is hard, and most profitable businesses have a shelf life.
> NYTimes - Nov 29, 2004 — The Disco Ball of Failed Hopes - Intel, giant computer chip maker, seems to have lost its way lately; has publicly ... including the 25 percent decline in Intel's stock price this year
As far as I can tell, things are pretty good for the Intel/AMD duopoly. AMD's stock is up 1000% in the last five years. Right now AMD is on top. Just like how AMD was on top around 2004. Then after a few years of AMD winning, Intel turned it around and became on top again. It's like democrats and republicans.
This is no longer a duopoly. We have Apple Silicon and Windows on ARM has gotten new life. AMD and Intel don't have the x86 monopoly on the desktop and laptop market anymore.
I'm probably not the only person that switched to a MacBook in the last two years because their products are leagues above what AMD and Intel offer. This is the first Laptop I've had that's quiet, has 10+ hours battery life and doesn't lag.
Every Windows laptop I bought or tried in the last few years was a disappointment. They cost $ 2000 or more and feel slower than my old i7-3770k at home. They say they have improved battery life but in reality it's still only 4-6 hours if you are lucky (if you want M1 performance 2 hours...).
I agree this won't be the end of Intel or AMD and I think we have seen some progress in the last few years and I will be trying out the new AMD laptops in summer. But there is definitely a lot more competition today than in the last 20 - 30 years.
> I think companies have pretty clear life cycles
I think it's not that clear. Where I work (hp) you could argue we're like Intel: large public company, shareholder oriented, buybacks, etc. However, we've also gone through a series of consolidations, split-ups, spin-offs and so on. At this point our own company and all our cousins and step-children all have bits and pieces of a whole bunch of different companies.
Also, I'm not sure why a blue-chip company can't just keep on existing. We pay a lot of dividends to keep our investors happy, which means less is available for R&D. That doesn't mean there's no R&D, though, the challenge for a CEO managing a company like this is to balance the two competing demands. Competitors that aren't focussed on crowd-sourced shareholder demands can make disastrous decisions more easily.
Every blue chip that I've worked at had internal products that someone eventually founds a startup to copy. Sometimes, it's even an internal employee that leaves to start the new business.
Presumably what we saw as "fall" from the outside was Apple pouring hundreds of millions of $$$ into building M1, fixing design flaws in newer MacBook Pro lines etc.,
Reading various accounts it indeed was a precarious situation for Apple which could have gone either way.
(I think about MMORPGs where stats just keep going up exponentially, like how in WoW classic, top DPS was like 500 and now its like 50,000. But that's just a game.)
Developing countries, including China have added probably between an extra 30 to 60% more middle class folks with disposable income. That's going to grow because of India, Africa, South East Asia.
The bigger long term threat is the unsustainability of this, global warming and destruction of ecosystems.
That doesn't mean we'll avoid a major wealth wiping financial crash this decade but we'll get over it and continue to grow.
The "burning the planet" bit is the real killer.
But there are plenty of products that become "perfected" over time, and investing into R&D can just be wasteful and raise the breakeven price of the product, thus raising cost to consumers.
It's true that a company could strive to become a conglomerate and in theory get higher returns on new R&D, but it's been proven that conglomerates often lose focus and are harder to carry into perpetuity. Generally conglomerates that spin off focused companies create more overall value.
Though depends how you define financialization of course. In this context I just mean cost cutting, being strategic about lowering marginal costs. Excessive dividends or buybacks don't tend to be good for consumers. In some cases they can lower the cost of capital for a business this allow more cost efficient financing though.
Of course if you give profits to investors, that allows room for others to out-invest you.
But the assumption throughout the article is that, if Intel had reinvested, it would have been a good investment. That's far from clear, given that we know how wasteful organizations can get when they are top dog and flush with cash.
https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-bu....
The ultra wealthy never sell their shares for this reason. Instead they opt for taking out endless loans so they don’t pay taxes on their capital gains.
Since newly issued shares are not tax deductible for the owners, you'd basically be paying tax even if net zero capital is returned.
The tax-free dividend is more of a modern discovery, I think. Which is why the loophole hasn't been closed yet.
Whereas with a dividend, you pay tax immediately when the dividend is issued.
Unless you’re a billionaire of course: https://www.propublica.org/article/the-secret-irs-files-trov...
Well-adjusted people get to the point where they have enough money and they switch to doing something other than money-chasing. So in any cohort of people who got rich, the only ones who stay in the chasing-money game past that point are the sociopaths -- the chasing-money game actually selects for these people. Then they end up in charge of the vast majority of the population who do not (yet) have fuck-you money and who play the chasing-money game because they need to eat.
I don't know how to fix this. There are a lot of knee-jerk proposals but none of them will work.
Because the chip shortage is largely for older, cheaper silicon, Intel's model doesn't allow for building the chips that are actually needed right now.
- doesn't unlock some major new application for computers, 99% just want Office 365, which ran just as well on Sandy Bridge -> whole industry stagnated, being a couple of years behind is fine
- (M1 especially) battery life/perf is improved in a way that will matter to many -> Intel specifically risk being left behind in sector that still has the potential for big changes
https://berthub.eu/articles/posts/how-tech-loses-out/ https://www.youtube.com/watch?v=PQccNdwm8Tw
and here is one about the EU & 5G outsourcing:
I think that is a gross mis-characterization. It is absolutely self-afflicted, more like a drug addiction.
I'm not sure I've fallen for an internet myth or not, but I thought publicly listed corporations were required by law to act in the interest of their investors returns, 'by law' meaning they can be sued by shareholders. Or is that misinformation?
> The Business Judgment Rule asserts that as long as the Board of Directors conducts a reasonable effort to make informed decisions about what is best for a company in the long-run, a court will not question said decisions. [1]
My layman's understanding is it's fairly narrowly interpreted and really isn't as ever present in the backs of the minds of board members as the internet would suggest. you have to demonstrate some pretty awful judgement or get caught admitting your reasoning for a decision was opposition to shareholder interests.
The simpler explanation is that board members and executives have perverse incentives to act in short term interest so they do. As long as they avoid doing it negligently then they won't face any consequences even if most shareholders want a long term approach.
[1] https://www.thesustainableinvestor.net/blog/2016/02/23/fact-...
The problem is that "maximizing shareholder value" is what corporations should do, but it's also ill-defined.
You see this all the time in debates about whether a company should re-invest earnings or pay dividends.
The reality is that "maximizing shareholder value" is just rather vague, therefore meaningless. You need much more guidance than that.
If "maximizing shareholder value" is often misconstrued in some particular way leading to accidental value destruction, then I would say that misunderstanding is akin to a virus, yes.
That being said, great companies can be run by sales or engineering, but not by spreadsheet jockeys.