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Comment by coldtea | Hacker News Reader

>If Intel cuts its dividend the stock will crater.

Wait till you see what will happen to the stock when talent leaves the company (whatever it has left, anyway) after such pay cuts...

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What is Intel doing here?

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.

5% would be insane if inflation weren't 7%. However, cutting salaries to keep the dividend whole is insane.

real talent leaves

This. I've had one pay cut in my career, and it immediately made me just up and leave. I don't know why one would tolerate such a thing, unless there was significant up-side still on the table.

Upside might be not having to search for a job in current job market with layoffs happening left and right.

There are still plenty of opportunities out there. Layoffs are a social contagion that do very little, if anything, for a company’s financial health. This is all about the trend and trying to “discipline” labor. But it won’t work, especially this time because the US doesn’t have decent childcare (many mother won’t return to the workforce for a year or more) and has blocked millions of immigrants who would normally have entered the country the past several years.

That wouldn't be a problem for the more talented players - the ones you most want to keep

That wouldn’t be a problem for engineers who are good at networking or the interview song and dance, but plenty of talented engineers aren’t particularly good at those things.

The company will lose some talent, sure, but let’s not pretend this isn’t a strategic time for a layoff or pay cut.

Depends on the market. If everyone gets a paycut and Powell strikes the interest rates you' may have no other alternative.

Apple, Google, Nvidia & gang will always be happy to snap up a few promising/experienced engineers.

"a few"

I have heard about companies doing this in times of economic downturns to prevent layoffs. If that was the cause and it was communicated as such and temporary I'd be willing.

Example: https://www.independent.co.uk/news/business/news/toyota-staf...

In Germany this is known as "Kurzarbeit" (literal translation: short work). The company reduces the work hours of employees and the pay gets cut proportionally. The cut hours will be paid by the state at a rate of 60% (67% for workers with children, the rate is the same as unemployment).

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.

That's not the same. This one is a pay cut while maintaining the same hours.

Kurzarbeit is specifically for the industry ("Fertigung") so that the large production sites can survive when they're not getting enough orders to put everyone to work.

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.

Not sure that I'm right, but I have the impression that for companies that are strongly driven by "shareholder vale" (like Intel as it appears), if before the pay cut it is thought that cutting jobs would give a net benefit (again in terms of shareholder value only), shortly after the pay cut they will think so again/still think so, even if the pay cut was justified by being able to avoid layoffs in this way.

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

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