Intel Cuts Employee Pay to Maintain Quarterly Dividend
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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.
Intel's sales aren't going to get any better anytime soon, so the cut is coming eventually. They're starting a death spiral, one that'll be hard to escape.
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.
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.
Exactly, you either supplement your income with it or retire early and replace your income with it.
There are whole generations of people doing this.
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.
That's not how it works for a publicly traded company in a free market. Historically announcing a dividend has usually caused more people to be interested in buying, which increases your market cap correspondingly.
REITs and telcos are a much better choice for this investor class.
That interesting, because I don't understand the mindset of investors who are just trading stocks like baseball cards. They don't seem to care what the company actually produce, just that the numbers tell them that the stock can sell for a little more next year.
Divided makes a lot of sense, because it keeps yielding money, for the same initial investment. So it's just extra money, but it's money you can actually spend. Sure you pay taxes on the divided, but you still hold the stock and can sell that at a late time.
Honestly I feel that it problems are the companies that never pay divided. The investors then depend on buy-backs or trading to recover their investment. This has created investors that do not care about the companies they invest in. The companies can go broke tomorrow and that's fine, as long as they can sell their stocks before it happens.
This is because dividend stocks tend to appreciate less.
So taking $X in dividends every six months ends up being the same as selling $X of your portfolio every six months in the end.
Though, in a tax-free retirement account, it's moot.
Before the 1920s stock bubble, buying stock in a company was buying a portion of the company's future free cash flow in return for investment. The value of a stock was fundamentally coupled to running a profitable business. The dividend was the point.
The 1920s saw a major shift of valuation philosophy to a speculative mode, focusing on the price of a stock. Now, occasional crazy things happen where the price of a stock can shift dramatically even without change in the dynamics of the underlying business. Prices should reflect future earnings... but they often don't. Portfolio construction and indexing are protections against this, but the underlying philosophy goes even further in treating stock prices as random walks with underlying market beta, not as real businesses. Indexing punts out of real valuation.
I won't defend "dividend investing" with weird dividend manipulation, but I really do like having an alternative valuation model: the value of an investment is not the result of an increase in price since my purchase of that asset, but instead my recurring cash flow yield from owning that asset. I certainly have money in index funds and speculative assets, but I get a lot from a yield based valuation philosophy instead of price based valuation:
- Prices are heavily manipulated and favor insiders and funds, not individual investors.
- It feels more connected with reality.
- The growth of passive investments probably poses systemic risks (Mike Green's talks and interviews are great) and I don't want to piss in the pool too much. Yield based valuation makes me more comfortable making active investments.
- Easier to value different asset classes against each other, for example buying a house to rent out vs stocks. The valuation is my dollar yield per time per dollar invested.
- Boomers retiring and pulling money out of the system plus decay of globalization will put heavy deflationary forces on markets in the coming years. I don't feel like a price based approach to valuation provides clear guidance on how to navigate investments other than "be smart". A yield based approach lets me walk away with a return even if stocks stay flat or go down.
Pretty much all of the above comes from the book Getting Back to Business by Daniel Peris. Bit dry and dense, but very thought provoking.
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...
If they're cutting executive salaries by the largest amount it sounds good on paper but doesn't really do anything because their pay is, as you said, stock based.
So, unsurprisingly, very skeezy unless they change the largest factor in their pay.
Not that I have a whole lot of sympathy for someone who now makes only $100mm/year, but surely that's variable compensation working as it should.
One reason I imagine is them being excluded from dividend etfs which would mean an outflow
Or more importantly not sell at all and not be forced to pay tax when you are just going to re-invest the dividend.
Wait till you see what will happen to the stock when talent leaves the company (whatever it has left, anyway) after such pay cuts...
The company will lose some talent, sure, but let’s not pretend this isn’t a strategic time for a layoff or pay cut.
Example: https://www.independent.co.uk/news/business/news/toyota-staf...
So if a worker's hours get cut by 50%, they still get paid 80-83.5% of their wage. The company can choose to get the employees' pay back to 100% if they pay the difference, which sometimes happens if the hours are cut because there is not enough work and not because the company is in financial distress.
This helped quite a lot of companies to stay in business during COVID.
I admit that it's been heavily misused during Corona though, as every large corporation wanted to legally steal a little money from the state.
Investors already know this is deception and the market will value the company accordingly.
Intel should face the music and pay the price. Suspend the dividend entirely. (AMD last paid a dividend back in 1995!)
Growth stocks shouldn't be dividend stocks. That signals they have nowhere else to deploy the capital and are returning profits to investors. A buyback would be a better way to return cash to investors.
Intel's 5%+ dividend is insane anyway. That percentage yield on a non-REIT, non-PTP, non-cyclical (energy, etc.) business is very unhealthy and points to how anemic the stock is.
[1] https://www.crn.com/news/components-peripherals/intel-ceo-pa...
Read the 2022 Proxy statement starting from around P 66 for all the gory details. I think my estimate of $10M was probably high.
If they cut the salaries and still enough people stay, then the money they saved still is surplus by that definition.
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.
It seems surprising that Intel either doesn't think that retaining top talent is in the interest of shareholders, or thinks that investors aren't able to understand the investment. I would assume that investors who are still invested in Intel were holding out for the prospect that Intel would recover its former glory, but maybe it is mostly investors interested in near term dividend yields, or institutional investors that are sensitive to metrics other than something that is difficult to quantify like narratives or some notion of employee quality.
Management seems to be betting on a strategy of promising the world to gain government subsidies while in reality cutting costs and letting the business wither and die and I don’t know if that justifies the valuation.
The thing that made them big is pretty obvious: high-margin premium priced x86 CPUs, which is a position they were able to hold for decades due both to manufacturing excellence and being able to shepherd the standard. They simply can't do it anymore-- execution has stumbled, and the market for x86 is gradually weakening, especially in spaces outside the cut-throat, lower margin, consumer/corporate desktop "it must run Windows and my line-of-business software/Call of Skyrim" vortex.
They could have been using decades of margin to build and consolidate positions in other segments of the market, just to be sure that the next clever new device comes out with an Intel chip, even if it's non-x86. They didn't.
Rather than, say, taking the ARM licenses they ended up flogging and building a competitive mobile CPU on their leading process, they invented weird Atom chips that ended up in like 3 phones.
Okay, flash is huge now, but it's a low margin game maybe not worth their investment. But they chucked out Optane, which still had some possibility as a "halo product" and for some commercial price-is-no-object markets.
It remains to see how sticky Arc graphics will be; they got a boost by the tight market conditions last year where people would grudgingly take any card they could afford. Will people come back to them out of explicit preference? I also wonder if the Larrabee/Xeon Phi adventure set them back or ahead-- trying to make a GPU architecture out of x86 was an interesting take on "GPUs are hard to program", but did it yield a lot of useful knowledge?
It took Intel way too long to get the power consumption on the Atom processors down (not ops/Watt, but total Watts), back when Atom had a chance in the phone market. (A difficult task, which is why I bought ARM Holdings stock shortly after Android came out because I realized (1) nearly everyone was going to soon have a smartphone and (2) whether iPhone or Android won, it was going to be very difficult for Intel to get competitive in the smartphone market fast enough to prevent ossification of the market around ARM. Unfortunately, SoftBank took ARM private and closed out my trade.)
Now, the same dynamic of the low-end x86 processor eating its way up the stack to threaten the high-margin mainframe and RISC servers is playing out with low-end ARM eating its way up the stack and displacing a lot of uses for the high-margin x86 server chips.
Uh, probably fortunately. Softbank bought ARM for $32b 7 years ago, and fat chance it's worth that inflation-adjusted now.
> They could have been using decades of margin to build and consolidate positions in other segments of the market.
That seems pretty simplistic. Optane and Larrabee were bold efforts. (Heck, so was Itanium). It's not like they didn't try throwing money and R&D at things. But that isn't always enough.
> Rather than, say, taking the ARM licenses they ended up flogging and building a competitive mobile CPU on their leading process, they invented weird Atom chips that ended up in like 3 phones.
They made a decent effort with Xscale too, to be fair.
Sure, but they threw it away about a year before the iPhone came out.
Yeah, they did try a lot of bold efforts, but they've pretty much all been mis-steps. They always had factions that were "x86 forever" and when things weren't going great those factions would come in and say "hey, why are we working on this thing that's not our x86 bread-n-butter?" and they'd either kill it or they'd only half-heartedly keep it going until the underinvestment killed it.
Yep. Intel salaries were already on the low side. To some extent they could get away with this in the past because many of their locations were outside of silicon valley in places where there really weren't a lot of (or any) other companies where you could work at the same level. For example, say you worked at their Folsom, CA or Hillsoboro, OR locations - if you were going to change to a different company that pretty much meant you were moving. But now that a larger proportion of jobs are remote that strategy for keeping salaries low isn't going to work.
Intel could be valuable to America but the problem is the damned word could and it's not essential.
I mean, if you were TSMC's CEO/Board, knowing full well that your country of birth is highly dependent on your presence for its defense posture, would you do allow this to change?
After Intel sold its NAND division to SK Hynix, South Koreans were upset because the US government was trying to impose sanctions on Chinese chip factories. Koreans believe that Intel sold it to South Korea after consulting with the US government, knowing that Intel's Dalian fab in China would be affected. It is some kind of insider trading or fraud.
Then passing the IRA and pressuring Samsung Electronics and SK Hynix to build semiconductor factories on US soil is not an allied attitude.
And I wouldn’t just be worried about something simple and direct like “the United States losing influence over Taiwan’s semiconductor industry.” The concern is more like “the United States losing its global influence and thus its ability to almost unilaterally enforce a particular global order including (among other things) relatively safe global ocean freight.”
As a matter of fact, he published a video today talking about this topic in some detail. You can find it on YT with the title "Semiconductors: China's the Odd Man Out".
I don't know what a "business machine" is, but you probably aren't intimately familiar with organizations that have been directly purchasing large amounts of processors or processor containing devices over the last several years. For many such entities, AMD has made way more sense than Intel.
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.
Dividends are silly in a world where you can achieve the same result and save everyone 20% tax by doing stock buybacks instead. It's also silly to strongly differentiate between dividend paying stocks and non dividend paying stocks as opposed to focusing on the business' cash flow, unless you're purposely avoiding dividend paying stocks because they suck from a tax perspective.
Yet, dividends are entrenched in many investor's psyche. Even official regulatory training in the US teaches registered representative that it's a good idea to recommend dividend bearing stocks to people who want "income" from their investments, which is a fallacy. Large mutual funds also have special categories for stocks providing high dividend yields.
Sad that this is the strategy as opposed to leveraging the incredible opportunity they have from their fabs.
Yes this is a shit situation for Intel, but public companies should be paying dividends, IMO.
> Artificial financial results: The impact on earnings per share can give an artificial lift to the stock and mask financial problems revealed by a closer look at the company’s ratios.
> Abuse: Companies can use buybacks as a way to allow executives to take advantage of stock option programs while not diluting EPS. However, there isn't much evidence supporting the widespread belief that this happens.
> Price bumps: Buybacks can create a short-term bump in the stock price that some say allows insiders to profit while suckering other investors. This price increase may look good at first, but the positive effect is usually temporary, with equilibrium regaining when the market realizes that the company has done nothing to increase its actual value. Those who buy in after the bump can then lose money.
Basically there is a greater potential for price distortion and abuse with buybacks than dividends. Of course dividends can be gamed too, but as a relatively unsophisticated buy-and-hold investor I feel a lot more confident about buying a stock with a solid yield and long history of increasing dividends than I do about buying a stock with no yield whose valuation has shot up recently and is sitting near its record high.
[1] https://www.investopedia.com/articles/financial-advisors/121...
1. There have been a studies that show companies are very good at doing buybacks near market highs rather than market lows so they are not efficient use of capital. Note that there have also been studies that try to claim stock buybacks do deliver long term value, but I have not found them convincing.
2. To build on the price bump point, the biggest beneficiary is actually short term activist investors and traders(who conveniently have similar time horizons as the executives) rather than long term shareholders.
3. Frequently buybacks are funded by draining reserves and/or with debt(especially when interest rates were low), this leaves companies weak when economic shocks happen like when the pandemic hit and we had to bail out the airlines who had no cash because they had been spending all their spare cash on buybacks. This could happen with dividends too but it is harder because it is an ongoing 'expense' you have to plan for because you pay it out every quarter rather than allow large sudden expenditures like you have with buybacks.
https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for...
I wonder whether this sentiment also contributed to the meme stocks popularity, since outside the US nobody really buys US stock with high dividends and are pushed to speculate on volatile stocks ala "stonks go up"..
In theory you can claim it back, but it's a major pain in the ass. Some ETF issued outside the US and holding US stocks will do it.
Other strategies to avoid this annoyance include:
1. selling on the ex-dividend date and buying the next day.
2. buying a long-date call and selling a put instead of holding the stock
3. simpler version of 2: buy a deep in the money long-dated call, you won't be paying all that much for the convexity, and you don't have to think about dividends.
I’m sure the key people won’t hurt as much, but hardware people are pretty screwed overall. Your mastery of some Intel process has not much value in the market.
I worked at a tenant in a well funded facility doing semiconductor manufacturing R&D and prototyping. The nicest cars on that lot belonged to the tradesmen running wire and pipe for the tools. A few execs drove fancy cars in their special lot.
Also it is highly likely TSMC pays much less than Intel's process/fab side of the house and works its process/fab teams a lot harder.
When everyone around you is laying thousands of people off, your top talent isn't likely to leave you, regardless of what indignities you heap on it.
The more plausible risk is people mentally checking out, and not giving much of a crap about their work.
I don't think optimizing the performance of banks the create trillions of debt and were bailed out trillions of dollars is "in the interest of taxpayers".
why do people still think a bunch of coked up degenerates who almost bankrupted the world are "talent".....
But if history is any guide, the dividend cuts are also coming.
The current yield is over 5%, which is higher than any duration of US Treasury. This should be a pretty low bar, but over the last 30 years isn't. When company dividend yields approach this threshold, something often gives.
https://www.nasdaq.com/market-activity/stocks/intc/dividend-...
It's also worth noting that as late as a few weeks ago there were several articles swearing up and down that there's no way Intel will cut its dividend. That's looking more ridiculous by the day.
They can take a giant dump directly in your mouth while making steady eye contact and you can’t leave because there is nowhere to go.
In software and in startups if you have relevant skills and modern, up to date experience you can switch easily.
Don’t work in industries that are declining and have no future and require advanced technical training that is non transferable.
Oh you got a PHD in quantum silicon dick butt nanometers from MIT? That’s worth dick at 99.99% of companies.
It will happen to you. You want startups where your abilities are transferable and the hiring market is broad and deep.
And never move to a location where the only option is intel. That’s their favorite trick. Fuck that!
Intel has a steady funnel of smart international PhD grads who are usually fine with the comparatively lower pay.
Top undergrads after a few years guided by competent people and managing to keep motivated will be way better than the average PhD graduate.
I will also point out that in the current climate, 'switch easily' isn't a given in software.
If you work in chip design for Intel, this just isn't the case; there's only a few places you can go.
The sweet spot is somewhere in between, where you have non-trivial skills others don't, and multiple companies willing to pay for them. In essence, supply and demand, like always.
Now some of them do take the initiative and learn SW skills, or data analysis properly, and switch due to that. But the majority of them feel stuck. They have a heavy workload and do not feel they have time to learn new skills.
[1] For a long time, and perhaps even now, the fabs only hired either technicians or PhDs. An exemption would be needed to hire someone with "just" an MS. Of course, almost none of these jobs actually need PhD level skills.
The majority of Intel employees are directly related to the fab, but those employees are not mostly PhDs without many other job prospects.
Look at Intel's projected node schedule, it's very aggressive. Show me the risk aversion there. The problem is that it's difficult to achieve that schedule without problems, and taking into account Intel's history, the market doesn't believe they can do it.
Have you ever owned a business? If employees got paid the value they produce, why would any business bother to exist?
If you want to get paid the value you produce: start a co-op; join a co-op; start contracting; or become a founder. Stop whinging, and do something about it. So many employees choose to work for a business - it is a transaction where they get paid and the business makes money, and both are usually better off for it.
I too dislike seeing employees get taken advantage of, but “fixing” capitalism is not trivial.
You can get paid in equity… and be 20-80% down on TC this year depending on where you work.
Co-op employees seem to be doing better off on average, so I would argue that "usually better off for it" is not really true. Better off than trying to run their own business - yeah, probably true for most; regardless of who gets the profits, businesses still need professional managers to run them effectively.
In any case, to reiterate, the point is that for it to be a compromise, we should all be aware of the nature of that compromise - that is, who is giving up what exactly, and for whose sake. It is only a true compromise if people knowingly choose to preserve it, because they feel that it's the best deal that they can get.
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.
Intel has a lot going for it still, but this is a sure fire way to hurt morale and create an exodus of good talent and future leadership, especially when your key rivals are hiring.
https://www.bloomberg.com/news/articles/2023-02-01/intel-cut...
> “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy.”
Calling bullshit on that.
A 25% pay cut when you're pulling in close to 200 million (ignoring the fact that the pay cut is likely to only apply to a portion of that which makes things even worse) is NOT a more significant real world impact than even the minimum 5% pay cut non-executive employees are getting and who do they think they are fooling by saying it is?
I'm shocked that it has taken him this long to nickle-and-dime Intel's remaining employees to keep his pockets lined.
The company is still around. A new CEO was appointed after Pat left. The company is now in talks with Broadcom to be acquired by Broadcomn.
Wouldn't be surprised if the words "organize" and "union" are spoken in hushed tones by a few people in the hallways tomorrow. If that gets any momentum behind it it would be a glorious thing and long overdue, but it might not help with Intel's financial difficulties or inspire shareholder confidence...
[1] https://www.intc.com/news-events/press-releases/detail/1600/...
[2] https://www.intc.com/news-events/press-releases/detail/1563/...
(I don't know what the relevant differences are here on GAAP vs non-GAAP.)
non-GAAP = Whatever we decide? :) Okay, I don't really know.
Real info: https://www.investopedia.com/articles/financial-analysis/062...
This is a good way to lose your best employees.
Also I think Meta and Amazon are getting in on the chips game?
Those are just the big players that I can think of too.
Everyone is making custom CPUs or accelerators, or both nowadays. This isn't 2005.
Your new employer will also ask whether you currently have active non-competes against you, and may think twice before extending you an offer.
No longer an option if you’re american
IANAL but yes there are now
> Restricts the ability of U.S. persons to support the development, or production, of ICs at certain PRC-located semiconductor fabrication “facilities” without a license;
See: https://www.bis.doc.gov/index.php/documents/about-bis/newsro...
Apple is now year 2 of throwing down the M1/M2 and the shock waves it created. AMD and Intel have to respond with an ARM chip. They just have to. Apple started it, so Qualcomm is going to do it, why wouldn't Samsung do it?
Intel has to play talent defense here. At a minimum, these companies are going to need deep x86 people that know how to do fast dynamic compiling transcoding like Apple did. Where can you get those? How about disgruntled Intel workers that got their pay cut?
That's what happens when you're a publicly traded company? Your primary role once you're listed is to make your stockholders money, and if you don't, your stockholders will vote to replace the people at the top refusing to focus on dividends. You can have all the morals and ethics and good intentions and those amount to a sum total of zero after IPO, because unless you bought enough of your own stock to retain majority control, you no longer own the ship, you only get to set the course and steer it, and if you don't do a good enough job at that, the ship owners will have you replaced.
It's a shit system, but that's the system.
(The rationale is, they'd have to hire someone to do your job when you're gone, although of course that's nonsense for engineers.)
No one on Wall Street was fooled by crap like this, and I doubt Intel's moves will make any difference, either.
Financially the money goes into either payroll or PTO, and this way they saved whatever percent. It was either this or lay off ~10% of the employees
If you worked there for years and had lots of hours banked it was fine, but as a newer employee it was very annoying.
10-15% cut by senior managers, that piece of it is positive.
Intel sucks in a lot of ways, but you seemed to list a bunch of inapplicable things. Intel's yearly review process is horrible, something Jack Welch would be proud of, pitting employees against each other, and their pay is terrible for a tech company.
I used to work at Intel. Some data points:
When the news about how bad Amazon's culture was (e.g. people crying at desk), my thoughts were "This sounds like Intel."
When you talk to Amazon employees, most say "Every team is different. We don't see such behavior in my team, and I don't work long hours (i.e. more than 40)." And the same can be said at Intel. If you're close to the fab, the behavior is crap. Software tends to be pretty chill. And you'll see everything in between. I recall once going in on Saturday and talking to a guy - he said he'd worked every weekend for the last 6 weeks and expects to continue doing so for a month or two more.
Everyone I know who has left Intel to join Amazon is happier at Amazon. Everyone. The most common refrains:
1. Good work/life balance at Amazon (although some had it good at Intel too).
2. Far fewer morons at Amazon. When you're in the non-core parts of Intel (e.g. software), the people around you are fairly poor in terms of talent (e.g. complaining about having to use Git, saying we're using it only because Microsoft owns Git (!), refusing to use branches in Git and insisting on just creating command line arguments for every experiment you want to try).
Intel, though, does have better PTO.
So the OP would rather have Intel fire thousands of employees?
Ah yes - the only option
They still made 8 billion in profit in 2022. There's ~130k employees, let's be generous and say average income for all of those is $120k a year. This is generous because there's a massive amount of factory workers that get paid nowhere near this. That's $15 billion a year in salaries. Cutting that by 10% is $1.5 billion. Intel still would have had several billions in profit.
As I said - no reason except greed. The business is not in jeopardy.
> leadership is taking responsibility by cutting their own pay
This is a really empty gesture. Leadership has leverage to get that pay bumped up again very quickly, and I guarantee they will. They may even get bonuses to offset it in the future.
Non-leadership employees have extremely little to no leverage to get their pay back up. And in terms of financial stress, a leader making $300k a year taking a 15% cut isn't going to feel much different. Someone making $60k a year on the fab floor is going to have to make lifestyle changes with a pay cut.
Intel already has low wages relative to the US software industry and since the work requires a high level of general capability, and often a PhD, for Intel to get top people to build competitive processors should require substantially higher wages than are common in the US software industry and other industries which someone who could easily get a chemistry/solid-state physics/etc. PhD could easily choose instead.
Suppose you need to cut employment costs. Is this always better than firing staff?
- For employees: you share the burden instead of some facing hard options (firing) so if you are a team player, this is the choice for you. Those who have options in the market, can still leave for greener pastures; if this was the deciding factor, perhaps they were not too committed on the job anyway? If your unit was on the brink of being profitable (such as being few percent on the negative)), it was just brought to the profitable side, and it might be that now the entire unit can keep their jobs.
- For the company: you still have the option for downsizing, and you just bought time to plan it more thoroughly.
Without the second part where the dividends have not been cut and the company would otherwise be making sound business decision it would also be understandable.
As it is tho, it is smelly as hell.
Given that a large part of tech employee compensation is through stock, what’s the break even point between further lowering the stock price and directly lowering compensation?
The higher your band the higher your paycut. Thats responsible actually.
Perhaps it will be temporary until they pick backup again
Intel went through a major round of layoffs in 2016. (This was called ACT.) I don't know of any pay cuts, just salaries that weren't particularly high to begin with and haven't risen very fast.
This time they're apparently trying to avoid large-scale layoffs. Cutting salary/benefits isn't great either though. If they want to reduce payroll expenses, they could take volunteers for people to switch to a 32 hour a week schedule in exchange for reduced pay (which wouldn't even be a new policy, it just isn't very well known).
Layoffs are inevitable at Intel it’s more a question of timing.
Recent layoffs have indiscriminately targeted talent and pay cuts deter those that are primarily driven by returns.
Unfortunately, I highly doubt that. With pay cut, comes a huge drop in morale across all the employees. Highly performers even consider leaving, and some employees leave.
After a layoff, the rest of the employees are more productive and the company gets to decide which employees to lay off (depending on business needs, comp-to-productivity, or whatever else).
> That said, investors need to take a paycut in dividends as well.
Totally agreed. As an investor and an employee, I feel sad to see my peers be laid off just so that a company can pay the same dividends and maintain earnings.
Layoffs also create huge general morale drops, greater the more the company has succeeded in the near universal practice of trying to get people to treat the company as a surrogate family.
intel has decided to shed their best people so as to keep the stock from falling more today. I guess the longer term future isn't so important anymore.
Is this also a way to reduce headcount, but without the cost of severance packages?
Headline should read "Intel quiet firing workforce to please shareholders"
Microsoft can't rethink Windows because they will never corral the PC makers on a reasonable timetable
PC makers are still selling the same laptops as four years ago (modulo minor spec bumps) because Windows is basically the same OS as four years ago (modulo some UI fluff). Intel and AMD are stuck in the middle waiting for the deadlock to break...but the only winner is Apple.