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While a focus on financials can certainly undermine a technology company, the reality is that Intel's R&D has not been held back by a lack of cash. Intel has,

While a focus on financials can certainly undermine a technology company, the reality is that Intel's R&D has not been held back by a lack of cash. Intel has, and has always had, plenty of cash, even after stock buybacks. Intel's problem is not a financial one, it is a technological one. They have failed to make production-worthy processes at the smallest nodes, 10nm or below. This does not appear to be for a lack of cash to be able to do so. Now, it is certainly the case that a company _can_ lose its technology edge due to allocating its money incorrectly. But whatever the source of Intel's problems in R&D, it is not a lack of money to spend on it, whether due to stock buybacks or anything else.

SkyMarshal 5y ago
That's exactly what the article actually says, that stock buybacks have not (yet) hindered Intel's ability to invest in R&D, and the problems are elsewhere: "Given the availability of these sources of funds, the vast sums that Intel has wasted on buybacks have not thus far imposed a cash constraint on its investments in semiconductor fabrication. Rather, it has been a deficiency in organizational learning—the essence of the innovation process—that has hampered Intel’s implementation of process technology. The generation of high levels of productivity from P&E and R&D expenditures requires, as a second social condition of innovative enterprise, organizational integration, working in combination with financial commitment. Organizational integration mobilizes the skills and efforts of large numbers of people in a hierarchical and functional division of labor into the collective and cumulative learning processes required to transform technologies to generate a higher-quality product and, then, access markets to attain economies of scale." ... "Accepting stock yield as the measure of enterprise performance, in recent years Intel’s senior executives who exercise strategic control have lacked both the incentive and, increasingly we would argue, the ability, to implement innovative investment strategies through organizational integration.” [1]:https://news.ycombinator.com/item?id=27783913 https://news.ycombinator.com/item?id=27783913

SkyMarshal 5y ago

That's exactly what the article actually says, that stock buybacks have not (yet) hindered Intel's ability to invest in R&D, and the problems are elsewhere: "Given the availability of these sources of funds, the vast sums that Intel has wasted on buybacks have not thus far imposed a cash constraint on its investments in semiconductor fabrication. Rather, it has been a deficiency in organizational learning—the essence of the innovation process—that has hampered Intel’s implementation of process technology. The generation of high levels of productivity from P&E and R&D expenditures requires, as a second social condition of innovative enterprise, organizational integration, working in combination with financial commitment. Organizational integration mobilizes the skills and efforts of large numbers of people in a hierarchical and functional division of labor into the collective and cumulative learning processes required to transform technologies to generate a higher-quality product and, then, access markets to attain economies of scale." ... "Accepting stock yield as the measure of enterprise performance, in recent years Intel’s senior executives who exercise strategic control have lacked both the incentive and, increasingly we would argue, the ability, to implement innovative investment strategies through organizational integration.” [1]:https://news.ycombinator.com/item?id=27783913 https://news.ycombinator.com/item?id=27783913