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Comment by brookst | Hacker News Reader

Intel's in trouble, but they will have no difficulty sourcing the cash for any investments that promise to reverse the trend. The terms might be better or worse, but it's not like Gelsinger is going to have a great plan that just needs $20B and it just sits on a shelf because the investment can't be sourced.

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Agree.

One perspective that I'm amazed hasn't become obvious to mainstream yet is that there are a growing number of private companies where are functionally extensions of the US government. Everyone knows about the US military-industrial complex, but they haven't clued in that the complex has grown and companies like Intel fall under that umbrella now. The CHIPS Act should have been a huge clue to anyone paying attention.

As long as the US government stands, regardless of who is in office and what letter is next to their name, Intel will not ever fail.

Intel may not ever fail, but that sure doesn't mean shareholders will reap any rewards. Boeing won't fail either, but has been losing huge chunks of money every quarter for 2 years now.

The CHIPS and Science Act is nowhere near a qualitative shift away from the investor-centric mentality of managing a public company. Many investors are short-term greedy and don't learn much about the real goings-on of the company. It makes a few things cheaper, but if you compare to TSMC and Samsung it's quite clear that Intel doesn't get anywhere near the amount of government money or political power that its competitors at the leading edge happen to have in their respective localities.

Won't fail but their stock can and likely will continue to fall for quite some time.

When its self-professed peer state adversaries are Russia and China, is it surprising the US is bending more towards national champions?

It's the logical move from the national security perspective but I hope this doesn't turn into another Boeing aerospace monopoly fiasco where we saw the space program effectively stagnate for 30 years due to lack of competition.

Disruptors in the chip manufacturing space are bascially gonna have to grow these things in petri dishes if we get locked into a government owned monopoly

I look at it as internal / external competition.

Even the heavyweight, plodding military-industrial companies were innovative when they were being driven by external, nation-state competitors.

Intel should probably think about reducing the dividend and focusing on plowing that money into investment in their business for a while.

That would destroy the stock price, and executives get paid largely in stock.

Not agreeing or disagreeing, but have you seen the stock recently? Surely at some point you have to ask if it makes stop prioritising the stock price and investors, and instead focus on the long-term sustainability of the company?

I’ve been watching both Intel and Meta stock with interest. They’re in a fairly similar situation. The reason why Intel trades at a P/E of 15 while Meta is hovering around 10 must be mostly the dividend. The market doesn’t trust Zuck but it still has some trust in Gelsinger to somehow balance the dividend with the massive fab investments.

If Intel gives up on the dividend, they could be down another 30-40% to Meta-like P/E levels.

It would just be a question as to whether the reinvestment would be expected to yield a high enough return. Theoretically, at least, if the dividend is being repurposed for investment and the market believes that that reinvestment will drive enought growth, then the stock price could stay flat or even go up. Especially in the current environment where there aren't many good places to invest capital.

I'd think that scenario is fairly unlikely though, and in any situation where the dividend goes away volatility will certainly go up.

Not only do the markets not trust Zuckerberg. But since he still has a controlling stake in the company, the stock should trade at a steep discount since stockholders have no say in the company.

But Intel would presumably be investing the forgone dividends in something that looks better to investors than the metaverse moneypit.

Meta is doing buybacks, which is just another form of dividend, so in that regard they are not that different.

Precisely this. As an executive, it is better to pay dividends and have the company borrow if needed.

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