Also issuing a dividend because you saved a bunch of money by laying off people you don't need is exactly the sort of thing that shareholders would demand and expect. It's called good corporate governance.
Seems to say they lost 2.7B in the first quarter of 2023?
I don't have an exact list but I think you'll see differences of that order in the years following big acquisitions like AMD / Xilinx for this sector.
Matt Levine goes into the gory detail: https://archive.is/0T1CG
They’re comfortable because they get most of the returns by selling their shares back to Apple.
1 - https://www.cnbc.com/amp/2023/05/03/apple-q2-2023-earnings-p...
Now, the 2.8B included a lot of one-time charges that made the loss larger than normal on a continuing basis- on a continuing basis the losses were more like 200M, which is about what the company guidance was for 2Q. But losing 200 million dollars is still losing money.
Disclaimer: long INTC
Surprisingly similar to Darwinist capitalism.
Companies can do well and lay off people at the same time. In such case, they just believe they'll do even better without those people.
The Intel workforce and leadership is failing to perform and continue bringing in sufficient revenue to justify a workforce of its size, and they will all lose their jobs anyway if it continues.
If shareholders think that firing a bunch of people to “eliminate waste” and pulling capital from the company in the form dividends to reinvest elsewhere is the way to maximise their returns (as a whole) then that’s what will happen.
I assume,based on my observations, that most companies have employees that impede productivity.
But, i do wish companies placed their responsibility to their employees over shareholders.
The content is barely journalism to start with.
To oversimplify: If you buy into the idea that a corporation is there for its shareholders, then there's little to be outraged about. If you believe a corporation is there for both its employees and shareholders, then there may be some outrage to be had.
There is no universal truth there. The mainstream perception right now is the shareholder-oriented view, and the more I understand capitalist incentive structures, and the fact that buying into the market is pretty much the underpinning behind our retirement structure, the more I personally subscribe to that view. But not everyone does, and there are many good reasons to not!
Even within the shareholder-oriented view, there's also a question of short term vs long term thinking. Does the slump that's causing the job cuts justify losing the domain knowledge, momentum, etc. that might come alongside job cuts? Is Intel making a bad call here? Even as a shareholder I might think Intel's being too drastic.
The headline, while potentially outrage-baiting, does carry important information. If Intel were losing so much money that it was unable to pay dividends, then the job cuts would be almost universally justifiable. I certainly would have some sour grapes if I were laid off in the midst of an organization that can still pass value to its shareholders, especially if I felt that I were a part of that success and effort.
It's not an idea, it's a literal legal duty.
[1] https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
[2] https://insight.kellogg.northwestern.edu/article/shareholder...
[3] https://medium.com/bull-market/there-is-no-effective-fiducia...
> a corporation is there for its shareholders
Which is a little different from maximizing shareholder value and is kinda true. As the second link says
> a CEO or board is not legally obliged to maximize shareholder value. They need to maximize the value of the corporation and act in its best interest.
Which IMO agrees with OP. The company is there for the shareholders. The execs and directors have a ton of leeway when it comes to acting in the corporations best interest, but if an exec would be in trouble if they said "we're implementing this policy for the benefit of employees and it's going to come at the expense of the company and we have no argument for how this is good for the company". But it's not that hard to take the same policy and say "happier employees are good for the company"
It is a legal duty but there's a huge amount of leeway. You could certainly implement lots of policies that put employees on close to equal footing and argue that it's in the best interest of the company. No one would find you in breach of fiduciary duty, although the board/shareholders might disagree and remove you.
That cartoon has resonated over the years because it illustrates a point that complexifies the whole shareholder-value concept: you can recognize that a corporation's fiduciary duty is to its shareholders, but you still have a long term / short term thinking problem. If a corporation is just shoveling its profits at shareholders without consideration for the future, or, in the cartoon example, destroying the planet, is it really providing them the best value?
There is no universal definition of shareholder value, legally or otherwise. I'm a shareholder in many companies, and to me they should deliver me profits when it makes sense, take care of their employees, not harm the environment, not overspend, not cut corners on health or safety... it's a long list, really.
I also found it at the New Yorker: https://www.newyorker.com/cartoon/a16995
I am unsure of the original source.
There's a legal duty to not cheat shareholders by idiotic spending, pocketing the investment money, and the like. But there was never a duty to optimize returns to shareholders.
I said that corporations exist for their shareholders. This is a legal fiduciary duty.
The history of incorporation suggests the contrary. This attitude is backed up mainly only by 1980s-onwards neo-proprietarian ideology/faith/apologia.
> This is a legal fiduciary duty.
Much like use of fiduciary in the usual sense: not screwing over your shareholders is, yes. Not choosing the plan to maximize the right outcomes ("quality attributes" other than profit exist) after the right length (short or long?) time not being the best one? No.
Shareholders usually get some vote through the board, but they are secondary to the actual incorporation documents.
But tech companies came and changed everything by selling BS visions and pumping their stock high…who needs dividends when I can lose money and still increase my stock price by selling the latest fad to investors, e.g., Uber.
Personally, I think we should revert to the previous system.
Long Intel but as Dylan (and many others) noted they should have stopped the dividend a year ago.
That's not the point.
Also, this mythology of the corporation as a shareholder profit maximizer is just dead 70s orthodoxy. It isn't the case in most other developed economies and you and Marty Lipton and can keep Delaware.
I understand you were just calling out the porn in front of you... "you know it when you see it" style. But you also phrased it in a diminutive way towards the person you were responding to. What you failed to catch is that I am using the royal you in my comment. I'm not calling you out specifically, I'm telling the reader that if you actually buy into the porn, then you lack sophistication.
Investors expect that a stock would return it's value in dividents or the company will have a very likely positive future outlook, intel doesn't have the second (lots of debt, lots of capital required to stay compatitive and high interest rate).
letting go of employees for intel is only logical and they should keep doing it until they start seeing positive returns to their new investments.
Woke: Following data and long term trends to stay informed and be a good citizen.