4 ms·

> I'm excited by the possibility of Intel's recovery from it's long, slow, near death experience. Intel made 24 billion dollars last year on 78 billion dollars

> I'm excited by the possibility of Intel's recovery from it's long, slow, near death experience. Intel made 24 billion dollars last year on 78 billion dollars of revenue. It's not exactly near death. 1996 Apple was near death. Intel is having a mid-life crisis at best.

systemvoltage 6y ago
Intel is growing, just not as much as people expect. That’s how companies now are evaluated. Grow or gtfo.
- kevin_thibedeau 6y ago
  Don't even think of trying to pay a dividend or your stock is trash.
  - deleted 6y ago
    [deleted]
  - GlennS 6y ago
    Why would you ever pay a dividend when a stock buyback is more tax efficient for US investors?
    - ac29 6y ago
      Qualified dividends are taxed at the same rate as capital gains in the US. There are benefits to the tax deferring nature of stock buyback induced capital gains, but there are also benefits to being taxed each year along the way via dividends (such as the risk that capital gains tax will go up in the future). Many companies both pay dividends and do stock buybacks, Intel among them.
      - danielmarkbruce 6y ago
        Also, think of pension funds, insurance companies and the like - they are huge investors, often pay no tax on dividends, and like the (usual) reliability of dividends so they can pay out cash as needed.
  - BeetleB 6y ago
    Intel actually pays fairly decent dividends. Always has.
- gumby 6y ago
  But they aren't in any way in control of their own growth. See my comment a little above, or simply look at their gruesome financials: https://www.intc.com/news-events/press-releases/detail/1439/intel-reports-fourth-quarter-and-full-year-2020-financial https://www.intc.com/news-events/press-releases/detail/1439/...
  - fauigerzigerk 6y ago
    Looks more lackluster than gruesome to me. But I think they‘re going to have to slash their margins to keep revenue from falling off a cliff when data center ARM chips become competitive.
graeme 6y ago
The problem is fabs need massive scale. If Intel loses the scale it won’t have the ability to invest at a good cost base in new generations and risks falling behind. Profits today, decline tomorrow. Blackberry revenues grew for several years after the iPhone, but they were doomed. This is Intel’s challenge. Present profits are misleading. The CEO recognizes it and they have a good shot of turning things around though.
- totalZero 6y ago
  You can't exactly compare a capital intensive manufacturing company to a smartphone company. The capital assets involved in what Intel does are so substantial that it would take time to unseat them in the best of circumstances, let alone right now when even semiconductor equipment companies are complaining that they can't get the chips they need for their machinery.
gumby 6y ago
Intel is circling the drain; their revenue masks a deep illness, like a healthy looking person who drops dead of a heart attack at a party. I do think there's a chance Gelsinger can convince the company to turn around. They do have a lot to work with, despite having squandered many many opportunities. Why do I say sickness? - Most of their revenue comes from a single product line; every BU reported a revenue decline last year except mobileeye (small) and CCG. - Their parts are not broadly competitive on performance/W nor raw performance except in diminishing subsectors. - They have no presence in the largest growing sector: mobile. - Oh, that "eye-popping" $20B investment in fab over the next three years? TSMC plans to invest $100B in the same period! Now the Intel of old could probably have pulled out of these problems, but let's look how they got here: - They have historically been a fab powerhouse, with process years ahead of the competition. But they have repeatedly missed their own milestones for smaller node size and are now (relatively behind or even far behind). They've had to throw in the towel repeatedly over the past few years in this area. - They've spent time fiddling at the edges (e.g. depth cameras) pouring money into new businesses and then dropping them. Not a bad idea when you need growth and should diversify your revenue stream (look at my first point above) but terrible if you have a 100% whiff rate. - Of those whiffs above they have had some bad ones, like radio chipsets, when they earlier had said they were counting on them. - Their architecture appears to be inappropriate for mobile/low power. This is a self-own. They not only had for its time the fastest ARM product line (StrongARM, from the DEC acquisition) but threw it away because they were focused on their high-margin quasi-monopoly x86 line. - Their partners (Microsoft, Dell, etc) are enthusiastically exploring ARM and Intel at the moment has no counter. - Their "only the paranoid survive" culture is gone; business decision making has been slow and lazy for more than a decade. - They are heavily dependent on their partners. If there is a phase change in the market (MS finally ships a decent ARM Windows, Dell produces a decent ARM laptop that runs it), well, bye bye a big chunk of CCG revenue. They could save some share by slashing price, but it's still terrible. This is why I said it's near death.
- vlovich123 6y ago
  Intel has ~23 billion in cash reserves [1]. MSFT in the 2000s (when lots of people were proclaiming their death) had cash reserves of ~40 billion [2]. Microsoft came back to compete with Apple as the most valuable company. Apple was far closer to death & managed to come back. AMD was routinely having problems competing & managed to stay in it enough to come back as the x86 leader. Does Intel have a problem? Yes. They know it too. I think you're overlooking how long a runway $20 billion buys you though to correct things & try different strategies. It's also ignoring the huge push within the US government to subsidize silicon manufacturing in the US for political & security reasons, of which Intel will be a huge beneficiary. I fully expect in 15 years Intel will still be a very valuable independent company with a market cap larger than today. [1] https://www.macrotrends.net/stocks/charts/INTC/intel/cash-on-hand https://www.macrotrends.net/stocks/charts/INTC/intel/cash-on... [2] https://money.cnn.com/2002/04/12/pf/agenda_msft/ https://money.cnn.com/2002/04/12/pf/agenda_msft/

systemvoltage 6y ago

Intel is growing, just not as much as people expect. That’s how companies now are evaluated. Grow or gtfo.

kevin_thibedeau 6y ago
Don't even think of trying to pay a dividend or your stock is trash.
- deleted 6y ago
  [deleted]
- GlennS 6y ago
  Why would you ever pay a dividend when a stock buyback is more tax efficient for US investors?
  - ac29 6y ago
    Qualified dividends are taxed at the same rate as capital gains in the US. There are benefits to the tax deferring nature of stock buyback induced capital gains, but there are also benefits to being taxed each year along the way via dividends (such as the risk that capital gains tax will go up in the future). Many companies both pay dividends and do stock buybacks, Intel among them.
    - danielmarkbruce 6y ago
      Also, think of pension funds, insurance companies and the like - they are huge investors, often pay no tax on dividends, and like the (usual) reliability of dividends so they can pay out cash as needed.
- BeetleB 6y ago
  Intel actually pays fairly decent dividends. Always has.
gumby 6y ago
But they aren't in any way in control of their own growth. See my comment a little above, or simply look at their gruesome financials: https://www.intc.com/news-events/press-releases/detail/1439/intel-reports-fourth-quarter-and-full-year-2020-financial https://www.intc.com/news-events/press-releases/detail/1439/...
- fauigerzigerk 6y ago
  Looks more lackluster than gruesome to me. But I think they‘re going to have to slash their margins to keep revenue from falling off a cliff when data center ARM chips become competitive.

graeme 6y ago

The problem is fabs need massive scale. If Intel loses the scale it won’t have the ability to invest at a good cost base in new generations and risks falling behind. Profits today, decline tomorrow. Blackberry revenues grew for several years after the iPhone, but they were doomed. This is Intel’s challenge. Present profits are misleading. The CEO recognizes it and they have a good shot of turning things around though.

totalZero 6y ago
You can't exactly compare a capital intensive manufacturing company to a smartphone company. The capital assets involved in what Intel does are so substantial that it would take time to unseat them in the best of circumstances, let alone right now when even semiconductor equipment companies are complaining that they can't get the chips they need for their machinery.

gumby 6y ago

Intel is circling the drain; their revenue masks a deep illness, like a healthy looking person who drops dead of a heart attack at a party. I do think there's a chance Gelsinger can convince the company to turn around. They do have a lot to work with, despite having squandered many many opportunities. Why do I say sickness? - Most of their revenue comes from a single product line; every BU reported a revenue decline last year except mobileeye (small) and CCG. - Their parts are not broadly competitive on performance/W nor raw performance except in diminishing subsectors. - They have no presence in the largest growing sector: mobile. - Oh, that "eye-popping" $20B investment in fab over the next three years? TSMC plans to invest $100B in the same period! Now the Intel of old could probably have pulled out of these problems, but let's look how they got here: - They have historically been a fab powerhouse, with process years ahead of the competition. But they have repeatedly missed their own milestones for smaller node size and are now (relatively behind or even far behind). They've had to throw in the towel repeatedly over the past few years in this area. - They've spent time fiddling at the edges (e.g. depth cameras) pouring money into new businesses and then dropping them. Not a bad idea when you need growth and should diversify your revenue stream (look at my first point above) but terrible if you have a 100% whiff rate. - Of those whiffs above they have had some bad ones, like radio chipsets, when they earlier had said they were counting on them. - Their architecture appears to be inappropriate for mobile/low power. This is a self-own. They not only had for its time the fastest ARM product line (StrongARM, from the DEC acquisition) but threw it away because they were focused on their high-margin quasi-monopoly x86 line. - Their partners (Microsoft, Dell, etc) are enthusiastically exploring ARM and Intel at the moment has no counter. - Their "only the paranoid survive" culture is gone; business decision making has been slow and lazy for more than a decade. - They are heavily dependent on their partners. If there is a phase change in the market (MS finally ships a decent ARM Windows, Dell produces a decent ARM laptop that runs it), well, bye bye a big chunk of CCG revenue. They could save some share by slashing price, but it's still terrible. This is why I said it's near death.

vlovich123 6y ago
Intel has ~23 billion in cash reserves [1]. MSFT in the 2000s (when lots of people were proclaiming their death) had cash reserves of ~40 billion [2]. Microsoft came back to compete with Apple as the most valuable company. Apple was far closer to death & managed to come back. AMD was routinely having problems competing & managed to stay in it enough to come back as the x86 leader. Does Intel have a problem? Yes. They know it too. I think you're overlooking how long a runway $20 billion buys you though to correct things & try different strategies. It's also ignoring the huge push within the US government to subsidize silicon manufacturing in the US for political & security reasons, of which Intel will be a huge beneficiary. I fully expect in 15 years Intel will still be a very valuable independent company with a market cap larger than today. [1] https://www.macrotrends.net/stocks/charts/INTC/intel/cash-on-hand https://www.macrotrends.net/stocks/charts/INTC/intel/cash-on... [2] https://money.cnn.com/2002/04/12/pf/agenda_msft/ https://money.cnn.com/2002/04/12/pf/agenda_msft/