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Intel Cuts Employee Pay to Maintain Quarterly Dividend

376 points by rz2k 4y ago

quantified 4y ago
It would be interesting if the result is a decline in stock price due to this prioritization of dividend, as both are of interest to shareholders. 10-15% cut by senior managers, that piece of it is positive.
- bcrl 4y ago
  Maybe if it was 10-15% of senior managers being cut.
hinkley 4y ago
Wasn’t a cut of employee pay how they got into trouble in the first place?
- elihu 4y ago
  I don't think so, unless it was long enough ago to be outside my window of experience. 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).
newaccount2021 4y ago
Microsoft and Intel and the PC makers all seem to be in a deadlock 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.
rz2k 4y ago
When bailed out banks paid bonuses it was understandably unpopular, but there was a certain logic that retaining talent optimized performance of the remaining bank, and therefore it was ultimately in the interest of taxpayers. 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.
- sitkack 4y ago
  If Intel becomes a pure play foundry, bear with me, then it won't need those employees. It should be training those employees to become silicon designers and verification engineers at their own fabless semiconductors.
- faeriechangling 4y ago
  I don’t know who is invested in Intel that's betting on anything but a high risk high reward underdog story comeback. Intel already was undercompensating to the point of driving the talent out of their company to begin with. These wage cuts are a sign for investors to flee faster because management lacks coherence. 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.
  - hakfoo 4y ago
    I wonder if they just became terminally risk averse. 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?
nine_zeros 4y ago
Pay cuts are better than layoffs. That said, investors need to take a paycut in dividends as well.
- faeriechangling 4y ago
  Not in this case because the layoffs might result in a sustainable business but a paycut never will because the low comp workers left simply can’t run a globally competitive business. Intel itself wouldn’t even exist today if it didn’t layoff the great majority of its entire workforce some decades back. Layoffs are inevitable at Intel it’s more a question of timing.
- p1esk 4y ago
  Layoffs is how to get rid of your worst workers, pay cut is how to get rid of you best.
  - defrost 4y ago
    As pithy two edged maxims go, that is dull and chipped on both sides. Recent layoffs have indiscriminately targeted talent and pay cuts deter those that are primarily driven by returns.
    - p1esk 4y ago
      Agreed. In my defense, I was responding to a pretty dull comment.
      - defrost 4y ago
        No worries, we've all been there :)
    - sugarpile 4y ago
      Not true from the anecdotes, and admittedly just anecdotes, that I've seen. Top performers get some token, Approved by Legal™, <2% cut to avoid it being classified as a low performer firing, with a larger but still proportional percent coming from middle performers, and the the vast majority of the layoff percent consisting of low performers.
sys_64738 4y ago
No way would I accept a pay cut. Intel is a terrible company.
- saos 4y ago
  Its interesting issue actually. The higher your band the higher your paycut. Thats responsible actually. Perhaps it will be temporary until they pick backup again
Scubabear68 4y ago
I had to double check it wasn’t April 1st. This is a good way to lose your best employees.
- PaulDavisThe1st 4y ago
  If you're one of the best employees at Intel, who are you going to go work for? Choices are limited, and it's quite likely that those others are going to do roughly the same thing.
  - Ancalagon 4y ago
    Qualcomm, TSMC, Apple, Nvidia 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.
  - senttoschool 4y ago
    There are so many choices if you're a top talent in silicon. Apple, Amazon, AMD, Nvidia, Qualcomm, Broadcom, one of many AI accelerator startups, Tencent, Alibaba, Baidu, Microsoft, Meta, Google, ARM, TSMC, Micron, Samsung. Just off the top of my head. Everyone is making custom CPUs or accelerators, or both nowadays. This isn't 2005.
    - inetknght 4y ago
      How many of those companies fall under nebulous non-compete clauses? How many of the companies have anti-poaching agreements under the table?
      - mcast 4y ago
        Sure, just move to California where non-compete agreements aren't enforced
        tanelpoder 4y ago
        Wouldn't the previous employer in the previous state still be able to sue you in their state (as your old employment contract specifies that any disputes will be resolved in the courts of that previous state)?
MonkeyMalarky 4y ago
TF? Who is it that creates value at Intel, the shareholders or the employees?
georgeburdell 4y ago
Even weirder that last year Intel trebled the stock bonus, added a high performer profit bonus adder, and increased base pay by a lot. What a strange about face. What is Pat doing?
- compiler-guy 4y ago
  Thinking in terms of quarters rather than years or even decades.
  - UncleOxidant 4y ago
    Sure, and that's been the problem with the last couple of CEOs before Pat, but Pat came in expressly saying he was going to take the long view. I suspect that he's visited been by some large institutional investors who don't take the long view.
    - baq 4y ago
      If he did the right thing he’d have to take an 80% TC cut instead of 25%… stock needs to fall at least 50% from here of dividends are gone.
      - UncleOxidant 4y ago
        He should go further than 80% and take the average Intel engineer's salary until things turn around.
- UncleOxidant 4y ago
  I had high hopes for Pat, but I think the institutional investors have been getting to him.
  - simoncion 4y ago
    Pat did something similar at vmware. Froze hiring, promotion, raises, 401k matching, etc, etc. for a year, got himself an 80% pay raise for how well the company did, unfroze all that and fled to Intel. (The kicker is that vmware didn't compensate for the lost money and matching in the next evaluation cycle.) I'm shocked that it has taken him this long to nickle-and-dime Intel's remaining employees to keep his pockets lined.
andromeduck 4y ago
Never seen a company so intent on killing itself.
steveBK123 4y ago
Its amazing how quickly we went from semiconductor glut to all chipmakers guiding down, and now this.
Octokiddie 4y ago
The article doesn't actually substantiate the claim that the cuts are being made to maintain the dividend. The article does claim, through unnamed sources, that the pay cuts are real. 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-history 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.
hgarg 4y ago
"All employees below Principal Engineer, grades 7 to 11, will get a 5% cut, 10% cuts will be instituted for VPs, and the executive leadership team will take a 15% cut, with Pat Gelsinger taking a 25% cut. " So the OP would rather have Intel fire thousands of employees?
- tempestn 4y ago
  From the headline I would infer OP would rather Intel cut their dividend.
  - HDThoreaun 4y ago
    yea but they're not going to do that.
- coolestguy 4y ago
  >So the OP would rather have Intel fire thousands of employees? Ah yes - the only option
- 93po 4y ago
  Intel had record revenue in 2021 and $20 billion in profit. There is literally zero reason for cutting pay or jobs except for corporate greed.
  - jonas21 4y ago
    It's not 2021 any more. Intel revenue dropped significantly in 2022, meanwhile they were hiring as though the revenue growth would continue. It's a similar story to many other tech companies. But at least at Intel, leadership is taking responsibility by cutting their own pay more than their employees' pay.
    - jmholla 4y ago
      Leadership's income is much more closely tied to stock than their wages.
    - 4y ago
AlbertCory 4y ago
Back in the day at 3Com, Bill Krause used to announce that everyone had to take two days of vacation in the coming quarter. The reason was that he had "promised" Wall Street that we would hit a certain earnings number, and with accounting practices, your accrued PTO is "paid back" when you actually take it. (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.
- bluedino 4y ago
  I worked at a place during Covid where you were forced to use your pto as it was accrued. 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.
  - fatbird 4y ago
    Honeywell furloughed virtually its entire staff for two weeks in Q2 of 2020. Literally, no work and no pay, just all about reducing labour expenses by 2/13ths for the quarter.
georgemcbay 4y ago
From the inevitable "macroeconomic headwinds" notification quoted here: https://www.bloomberg.com/news/articles/2023-02-01/intel-cuts-pay-across-company-to-preserve-cash-for-investment 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?
anonreeeeplor 4y ago
You don’t want a Silicon job because your talent is illiquid. 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!
- fooker 4y ago
  Meanwhile ~50% of the EE PhD graduates, and ~10% of the CS PhD graduates from my university are joining Intel on a regular basis. Intel has a steady funnel of smart international PhD grads who are usually fine with the comparatively lower pay.
  - osnium123 4y ago
    Are the EE PhDs at your university better than the top undergrads? I ask this because a PhD is no guarantee of quality.
    - fooker 4y ago
      They’d be significantly better than top undergrads immediately after graduating. Top undergrads after a few years guided by competent people and managing to keep motivated will be way better than the average PhD graduate.
- vkou 4y ago
  > In software and in startups if you have relevant skills and modern, up to date experience you can switch easily. I will also point out that in the current climate, 'switch easily' isn't a given in software.
chrgy 4y ago
The worse culture, I have ever seen in any company. Amazed how they are still in business. The corporate greed, the culture of nepotism, killing innovation has been dominant.
- midoridensha 4y ago
  I think you're being hyperbolic, or you haven't worked in many companies. Intel isn't a great place to work (despite their corporate value claiming it is), but by most accounts, Amazon is much worse unless you really like a place with cutthroat corporate politics. And "corporate greed"? Doesn't that describe every American corporation? All the big tech companies are laying off right now (except maybe Apple). And nepotism? I'm not sure where you got that one from. Intel isn't a family business. 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.
  - nurspouse 4y ago
    > Intel isn't a great place to work (despite their corporate value claiming it is), but by most accounts, Amazon is much worse unless you really like a place with cutthroat corporate politics. 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.
beebmam 4y ago
Seems like the best response is a union drive. Why haven't Intel workers pushed for this? This is how you fight back.
- elihu 4y ago
  That would be great. Joining CWA might be a good option, but maybe someone has other suggestions. https://code-cwa.org/ https://code-cwa.org/
chrgy 4y ago
Hold on to your wallets, Intel employees! The company just announced pay cuts to boost their quarterly dividend, leaving employees to bear the brunt of the impact. But don't worry, the real prize is the company culture that's toxic enough to kill creativity and innovation. Who needs those pesky innovative ideas anyway? #IntelNotSoInteligent #TimeForBetter"
etempleton 4y ago
As an investor, I would have been fine with cutting the dividend if it meant saving the compensation of employees. 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.
- UncleOxidant 4y ago
  Agreed. This is a very capital intensive business. They should be investing that capital into upgrading their technology. The dividend should be off the table for the next few years, at least. Paying a dividend probably made sense in the 90s and even into the early 2000s when Intel pretty much owned the whole PC CPU market. But now they're in a tough spot and the only way out is to invest that money that they're throwing out there as dividends.
  - cmdrriker 4y ago
    Intel lost this battle years ago when leadership decided to badge engineer the shit out of their product portfolio and do stock buy-backs. In a capital intensive enterprise, Jack Welch school of management will only give the company maybe 10 years before those opportunity costs blow signifgant holes in your boat. Look at TSMC, they take government money, invested that in people and material. They’ve got a work plan in place to meet their customers needs which in turn is driving market direction. GF was left for dead and look at what they’re doing. They’re eating Intel’s lunch now while they’re flailing with mediocre graphic cards and no clear strategy where they’re going with future x86 designs. The universe is moving towards RISC and they’re essentially locked in a prison of their own making.
    - User23 4y ago
      The universe has been moving towards RISC since the mid 90s. The universe moves slow.
    - baq 4y ago
      Of all the things you picked the least relevant one. Intel without GPUs is dead. Gone. Zero. A foundry at best, with a decade to be top tier again. Intel without RISC is… fine? The instruction set doesn’t matter, the underlying hardware doesn’t execute it anyway, it runs microcode.
adg001 4y ago
If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends. Investors get dividends when the management creates a reasonable amount of profits, not when employees have to waive their dues to do investors a favor.
- int_19h 4y ago
  It's a textbook example of how owners of capital can extract economic rent from wage workers they hire to utilize that capital to produce something valuable. The whole point of any for-profit business that is not worker-owned is to "do investors a favor" with the money obtained by paying workers less than market value of the goods they produce.
  - adg001 4y ago
    No. Employees are neither VCs, nor credit institutions, nor social benefactors, nor non-profit, nor pro-bono volunteers. They work for a wage – And, yes, first hired that joined the ranks of executives with a vetted interest in the company (e.g. stock options) are already something other. Paying the wage is an obligation, if the employers want the work to be provided. Risks – and the associated rewards - are primarily with the investors. A work culture that shifts the risks onto workers has to be rethought.
  - robocat 4y ago
    > paying workers less than market value of the goods they produce 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.
    - baq 4y ago
      IOW employees take on less risk and in general are compensated accordingly. You can get paid in equity… and be 20-80% down on TC this year depending on where you work.
albntomat0 4y ago
I’m both thinking out loud, and not trying to justify the decision here. 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?
wefarrell 4y ago
So the executives are prioritizing money to shareholders over employees, which makes sense of course because the executives are of course large shareholders. I’d be curious to know if they’re cutting their option grants.
oh_sigh 4y ago
Does this mean principal and above engineers got no pay cuts?
manv1 4y ago
If Intel cuts its dividend the stock will crater. Since executive compensation is stock-based, tied to the stock performance, or both, there's an obvious incentive to keep the dividend going. 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.
- osigurdson 4y ago
  >> If Intel cuts its dividend the stock will crater 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.
  - epistasis 4y ago
    Depends on the investor. There is an entire class of investor that is focused on stocks that reliably deliver a dividend. I wasn't aware that Intel had joined old-economy companies like oil, but I also don't fully understand the dividend investor mindset, as I can't figure out a tax situation that makes it appealing...
    - sumantsharma 4y ago
      Probably works out fine for investors who have retired from their professional career.
    - fooker 4y ago
      > also don't fully understand the dividend investor mindset 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.
ulfw 4y ago
More good people will leave intel for AMD, ARM, Apple, Qualcomm, etc etc etc. 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.
nektro 4y ago
props for cutting pay instead of laying people off
- slantedview 4y ago
  Cutting pay to keep the company afloat is very different than cutting pay to give a dividend.
wayeq 4y ago
I've never shorted a stock before but this is tempting.
- jay-barronville 4y ago
  Very tempting.
photonbucket 4y ago
They have to cut the dividend, this is bananas
osigurdson 4y ago
I'm not an Intel shareholder (outside of ETFs maybe) but I would be far more interested in their stock if they cut their dividend entirely and invested 100% of earnings back into the business. Hire the best talent, become the kind of place where the best talent wants to be. Stop being a stodgy, old, risk averse has-been. I would really like to see Intel make a comeback but this dividend preservation move suggests they no longer believe in their own company.
- baq 4y ago
  It needs to die inside first. There’s been hope with Pat but the results are here and it’s just more of the same. The purge is needed and looks like it’s finally coming, at least 5 years too late, but look at where AMD has been before. It’s a high risk high reward mun or bust play.
- khyryk 4y ago
  Xe-HPC wasn't a risk-averse design, nor was Arc, nor was Alder Lake, nor was Sapphire Rapids. The only problem is that Xe-HPC is nowhere to be found, Arc was delivered 2 years late and buggy, and Sapphire Rapids was at least 1 year late; only Alder Lake delivered on time and without major problems. Thus, the problems came from poor execution. 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.
Kilonzus 4y ago
Ok keeping the dividend aside another way to look at this is instead of layoffs they insituted a pay cut for everyone with senior personnel taking more of the effect. Of course questions arise of what headwinds are they really facing or are they just taking advantage of the current rhetoric but either way I am a fan.
- recursv_thnkng 4y ago
  They did this pay cut on top of a layoff
mrtweetyhack 4y ago
[dead]
wly_cdgr 4y ago
Not working long nights and early mornings is not "phoning it in". It's having healthy boundaries as a sane and self-respecting adult.
irrational 4y ago
I know a lot of Intel employees. I've been asking them if they have been worried based on stories of layoffs, but they have all been upbeat about their jobs. None of them seem to have seen this coming.
- baq 4y ago
  It’s amazing how little people care about the 10-Q. It’s literally the most important document every quarter. Every single shareholder hence employee should read it every time a new one is released. The writing was on the wall, for everyone in plain sight.
saos 4y ago
shareholder > employees.
TheRealPomax 4y ago
> Intel’s leadership has decided that the dividend is more important than employee retention 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.
fnordpiglet 4y ago
Once you let accountants make decisions any company eventually gets to this point. Accountants are wonderful human beings who know the price of everything and the value of nothing. Source: I’m married to one.
LarsDu88 4y ago
If they cut dividend, the stock craters and employees with tons of Intel Equity get hammered far more than whatever Intel is cutting in salary.
User23 4y ago
Kodak did this once. We all know what happened after.
tommilukkarinen 4y ago
"This was an incredibly dumb move, as employees will become “quiet quitters” and lose morale." 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.
- jnsaff2 4y ago
  I’m sure that’s the MBA type rationalizing going on Intel. 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.
- baq 4y ago
  MBAs and bean counters ran this company into the ground in the first place. I’m sure the chain of decisions makes perfect sense given circumstances, but there was no vision to actually do anything seriously other than keep printing money. Lo and behold risk happens slowly then all at once.
wolverine876 4y ago
As many SV companies follow the 'bossism' trend and treat workers worse, who is taking the opportunity to attract the more dyanamic, motivated workers who want something better?
impossiblefork 4y ago
I don't really see how this can work out. 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.
neilv 4y ago
The timing coincides with all the "big tech" layoffs. Is this also a way to reduce headcount, but without the cost of severance packages?
valenterry 4y ago
Not based in US, but I'm curious: is this legal and can it be done? Or is it more like "if you don't take the pay cut we'll fire you" and this works because of hire&fire culture in the US?
Clent 4y ago
We have new words for this now. Headline should read "Intel quiet firing workforce to please shareholders"
Rafuino 4y ago
Ugh, I feel bad for all my former coworkers. Pat was supposed to be the returning savior of Intel and now I'm hearing rumors he might not last through 2024 at this rate. The thing is, even if Pat goes down, Intel is too big to fail for the US from a national security POV. While TSMC is starting to build more fabs in the US, they're doing it kicking and screaming, and the funding in the Chips & Science Act is just a drop in the bucket for now. I fully expect more semiconductor industrial policy from the US gov in the next 10 years. It's a good time to be in semiconductor policy at Intel, SIA, etc. etc.
albert-thomas 4y ago
Dylan's analysis here is spot on. I think this might go down as the worst decision in Pat G's tenure as CEO.
s3p 4y ago
*Upper level employees, not the lower level.

376 points by rz2k 4y ago

It would be interesting if the result is a decline in stock price due to this prioritization of dividend, as both are of interest to shareholders. 10-15% cut by senior managers, that piece of it is positive.

bcrl 4y ago
Maybe if it was 10-15% of senior managers being cut.

hinkley 4y ago

Wasn’t a cut of employee pay how they got into trouble in the first place?

elihu 4y ago
I don't think so, unless it was long enough ago to be outside my window of experience. 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).

newaccount2021 4y ago

Microsoft and Intel and the PC makers all seem to be in a deadlock 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.

rz2k 4y ago

When bailed out banks paid bonuses it was understandably unpopular, but there was a certain logic that retaining talent optimized performance of the remaining bank, and therefore it was ultimately in the interest of taxpayers. 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.

sitkack 4y ago
If Intel becomes a pure play foundry, bear with me, then it won't need those employees. It should be training those employees to become silicon designers and verification engineers at their own fabless semiconductors.
faeriechangling 4y ago
I don’t know who is invested in Intel that's betting on anything but a high risk high reward underdog story comeback. Intel already was undercompensating to the point of driving the talent out of their company to begin with. These wage cuts are a sign for investors to flee faster because management lacks coherence. 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.
- hakfoo 4y ago
  I wonder if they just became terminally risk averse. 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?

nine_zeros 4y ago

Pay cuts are better than layoffs. That said, investors need to take a paycut in dividends as well.

faeriechangling 4y ago
Not in this case because the layoffs might result in a sustainable business but a paycut never will because the low comp workers left simply can’t run a globally competitive business. Intel itself wouldn’t even exist today if it didn’t layoff the great majority of its entire workforce some decades back. Layoffs are inevitable at Intel it’s more a question of timing.
p1esk 4y ago
Layoffs is how to get rid of your worst workers, pay cut is how to get rid of you best.
- defrost 4y ago
  As pithy two edged maxims go, that is dull and chipped on both sides. Recent layoffs have indiscriminately targeted talent and pay cuts deter those that are primarily driven by returns.
  - p1esk 4y ago
    Agreed. In my defense, I was responding to a pretty dull comment.
    - defrost 4y ago
      No worries, we've all been there :)
  - sugarpile 4y ago
    Not true from the anecdotes, and admittedly just anecdotes, that I've seen. Top performers get some token, Approved by Legal™, <2% cut to avoid it being classified as a low performer firing, with a larger but still proportional percent coming from middle performers, and the the vast majority of the layoff percent consisting of low performers.

sys_64738 4y ago

No way would I accept a pay cut. Intel is a terrible company.

saos 4y ago
Its interesting issue actually. The higher your band the higher your paycut. Thats responsible actually. Perhaps it will be temporary until they pick backup again

Scubabear68 4y ago

I had to double check it wasn’t April 1st. This is a good way to lose your best employees.

PaulDavisThe1st 4y ago
If you're one of the best employees at Intel, who are you going to go work for? Choices are limited, and it's quite likely that those others are going to do roughly the same thing.
- Ancalagon 4y ago
  Qualcomm, TSMC, Apple, Nvidia 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.
- senttoschool 4y ago
  There are so many choices if you're a top talent in silicon. Apple, Amazon, AMD, Nvidia, Qualcomm, Broadcom, one of many AI accelerator startups, Tencent, Alibaba, Baidu, Microsoft, Meta, Google, ARM, TSMC, Micron, Samsung. Just off the top of my head. Everyone is making custom CPUs or accelerators, or both nowadays. This isn't 2005.
  - inetknght 4y ago
    How many of those companies fall under nebulous non-compete clauses? How many of the companies have anti-poaching agreements under the table?
    - mcast 4y ago
      Sure, just move to California where non-compete agreements aren't enforced
      - tanelpoder 4y ago
        Wouldn't the previous employer in the previous state still be able to sue you in their state (as your old employment contract specifies that any disputes will be resolved in the courts of that previous state)?

MonkeyMalarky 4y ago

TF? Who is it that creates value at Intel, the shareholders or the employees?

georgeburdell 4y ago

Even weirder that last year Intel trebled the stock bonus, added a high performer profit bonus adder, and increased base pay by a lot. What a strange about face. What is Pat doing?

compiler-guy 4y ago
Thinking in terms of quarters rather than years or even decades.
- UncleOxidant 4y ago
  Sure, and that's been the problem with the last couple of CEOs before Pat, but Pat came in expressly saying he was going to take the long view. I suspect that he's visited been by some large institutional investors who don't take the long view.
  - baq 4y ago
    If he did the right thing he’d have to take an 80% TC cut instead of 25%… stock needs to fall at least 50% from here of dividends are gone.
    - UncleOxidant 4y ago
      He should go further than 80% and take the average Intel engineer's salary until things turn around.
UncleOxidant 4y ago
I had high hopes for Pat, but I think the institutional investors have been getting to him.
- simoncion 4y ago
  Pat did something similar at vmware. Froze hiring, promotion, raises, 401k matching, etc, etc. for a year, got himself an 80% pay raise for how well the company did, unfroze all that and fled to Intel. (The kicker is that vmware didn't compensate for the lost money and matching in the next evaluation cycle.) I'm shocked that it has taken him this long to nickle-and-dime Intel's remaining employees to keep his pockets lined.

andromeduck 4y ago

Never seen a company so intent on killing itself.

steveBK123 4y ago

Its amazing how quickly we went from semiconductor glut to all chipmakers guiding down, and now this.

Octokiddie 4y ago

The article doesn't actually substantiate the claim that the cuts are being made to maintain the dividend. The article does claim, through unnamed sources, that the pay cuts are real. 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-history 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.

hgarg 4y ago

"All employees below Principal Engineer, grades 7 to 11, will get a 5% cut, 10% cuts will be instituted for VPs, and the executive leadership team will take a 15% cut, with Pat Gelsinger taking a 25% cut. " So the OP would rather have Intel fire thousands of employees?

tempestn 4y ago
From the headline I would infer OP would rather Intel cut their dividend.
- HDThoreaun 4y ago
  yea but they're not going to do that.
coolestguy 4y ago
>So the OP would rather have Intel fire thousands of employees? Ah yes - the only option
93po 4y ago
Intel had record revenue in 2021 and $20 billion in profit. There is literally zero reason for cutting pay or jobs except for corporate greed.
- jonas21 4y ago
  It's not 2021 any more. Intel revenue dropped significantly in 2022, meanwhile they were hiring as though the revenue growth would continue. It's a similar story to many other tech companies. But at least at Intel, leadership is taking responsibility by cutting their own pay more than their employees' pay.
  - jmholla 4y ago
    Leadership's income is much more closely tied to stock than their wages.
  - 4y ago

AlbertCory 4y ago

Back in the day at 3Com, Bill Krause used to announce that everyone had to take two days of vacation in the coming quarter. The reason was that he had "promised" Wall Street that we would hit a certain earnings number, and with accounting practices, your accrued PTO is "paid back" when you actually take it. (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.

bluedino 4y ago
I worked at a place during Covid where you were forced to use your pto as it was accrued. 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.
- fatbird 4y ago
  Honeywell furloughed virtually its entire staff for two weeks in Q2 of 2020. Literally, no work and no pay, just all about reducing labour expenses by 2/13ths for the quarter.

georgemcbay 4y ago

From the inevitable "macroeconomic headwinds" notification quoted here: https://www.bloomberg.com/news/articles/2023-02-01/intel-cuts-pay-across-company-to-preserve-cash-for-investment 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?

anonreeeeplor 4y ago

You don’t want a Silicon job because your talent is illiquid. 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!

fooker 4y ago
Meanwhile ~50% of the EE PhD graduates, and ~10% of the CS PhD graduates from my university are joining Intel on a regular basis. Intel has a steady funnel of smart international PhD grads who are usually fine with the comparatively lower pay.
- osnium123 4y ago
  Are the EE PhDs at your university better than the top undergrads? I ask this because a PhD is no guarantee of quality.
  - fooker 4y ago
    They’d be significantly better than top undergrads immediately after graduating. Top undergrads after a few years guided by competent people and managing to keep motivated will be way better than the average PhD graduate.
vkou 4y ago
> In software and in startups if you have relevant skills and modern, up to date experience you can switch easily. I will also point out that in the current climate, 'switch easily' isn't a given in software.

chrgy 4y ago

The worse culture, I have ever seen in any company. Amazed how they are still in business. The corporate greed, the culture of nepotism, killing innovation has been dominant.

midoridensha 4y ago
I think you're being hyperbolic, or you haven't worked in many companies. Intel isn't a great place to work (despite their corporate value claiming it is), but by most accounts, Amazon is much worse unless you really like a place with cutthroat corporate politics. And "corporate greed"? Doesn't that describe every American corporation? All the big tech companies are laying off right now (except maybe Apple). And nepotism? I'm not sure where you got that one from. Intel isn't a family business. 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.
- nurspouse 4y ago
  > Intel isn't a great place to work (despite their corporate value claiming it is), but by most accounts, Amazon is much worse unless you really like a place with cutthroat corporate politics. 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.

beebmam 4y ago

Seems like the best response is a union drive. Why haven't Intel workers pushed for this? This is how you fight back.

elihu 4y ago
That would be great. Joining CWA might be a good option, but maybe someone has other suggestions. https://code-cwa.org/ https://code-cwa.org/

chrgy 4y ago

Hold on to your wallets, Intel employees! The company just announced pay cuts to boost their quarterly dividend, leaving employees to bear the brunt of the impact. But don't worry, the real prize is the company culture that's toxic enough to kill creativity and innovation. Who needs those pesky innovative ideas anyway? #IntelNotSoInteligent #TimeForBetter"

etempleton 4y ago

As an investor, I would have been fine with cutting the dividend if it meant saving the compensation of employees. 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.

UncleOxidant 4y ago
Agreed. This is a very capital intensive business. They should be investing that capital into upgrading their technology. The dividend should be off the table for the next few years, at least. Paying a dividend probably made sense in the 90s and even into the early 2000s when Intel pretty much owned the whole PC CPU market. But now they're in a tough spot and the only way out is to invest that money that they're throwing out there as dividends.
- cmdrriker 4y ago
  Intel lost this battle years ago when leadership decided to badge engineer the shit out of their product portfolio and do stock buy-backs. In a capital intensive enterprise, Jack Welch school of management will only give the company maybe 10 years before those opportunity costs blow signifgant holes in your boat. Look at TSMC, they take government money, invested that in people and material. They’ve got a work plan in place to meet their customers needs which in turn is driving market direction. GF was left for dead and look at what they’re doing. They’re eating Intel’s lunch now while they’re flailing with mediocre graphic cards and no clear strategy where they’re going with future x86 designs. The universe is moving towards RISC and they’re essentially locked in a prison of their own making.
  - User23 4y ago
    The universe has been moving towards RISC since the mid 90s. The universe moves slow.
  - baq 4y ago
    Of all the things you picked the least relevant one. Intel without GPUs is dead. Gone. Zero. A foundry at best, with a decade to be top tier again. Intel without RISC is… fine? The instruction set doesn’t matter, the underlying hardware doesn’t execute it anyway, it runs microcode.

adg001 4y ago

If I were an Intel employee I would never accept a pay cut "justified" by the company's willingness to pay dividends. Investors get dividends when the management creates a reasonable amount of profits, not when employees have to waive their dues to do investors a favor.

int_19h 4y ago
It's a textbook example of how owners of capital can extract economic rent from wage workers they hire to utilize that capital to produce something valuable. The whole point of any for-profit business that is not worker-owned is to "do investors a favor" with the money obtained by paying workers less than market value of the goods they produce.
- adg001 4y ago
  No. Employees are neither VCs, nor credit institutions, nor social benefactors, nor non-profit, nor pro-bono volunteers. They work for a wage – And, yes, first hired that joined the ranks of executives with a vetted interest in the company (e.g. stock options) are already something other. Paying the wage is an obligation, if the employers want the work to be provided. Risks – and the associated rewards - are primarily with the investors. A work culture that shifts the risks onto workers has to be rethought.
- robocat 4y ago
  > paying workers less than market value of the goods they produce 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.
  - baq 4y ago
    IOW employees take on less risk and in general are compensated accordingly. You can get paid in equity… and be 20-80% down on TC this year depending on where you work.

albntomat0 4y ago

I’m both thinking out loud, and not trying to justify the decision here. 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?

wefarrell 4y ago

So the executives are prioritizing money to shareholders over employees, which makes sense of course because the executives are of course large shareholders. I’d be curious to know if they’re cutting their option grants.

oh_sigh 4y ago

Does this mean principal and above engineers got no pay cuts?

manv1 4y ago

If Intel cuts its dividend the stock will crater. Since executive compensation is stock-based, tied to the stock performance, or both, there's an obvious incentive to keep the dividend going. 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.

osigurdson 4y ago
>> If Intel cuts its dividend the stock will crater 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.
- epistasis 4y ago
  Depends on the investor. There is an entire class of investor that is focused on stocks that reliably deliver a dividend. I wasn't aware that Intel had joined old-economy companies like oil, but I also don't fully understand the dividend investor mindset, as I can't figure out a tax situation that makes it appealing...
  - sumantsharma 4y ago
    Probably works out fine for investors who have retired from their professional career.
  - fooker 4y ago
    > also don't fully understand the dividend investor mindset 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.

ulfw 4y ago

More good people will leave intel for AMD, ARM, Apple, Qualcomm, etc etc etc. 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.

nektro 4y ago

props for cutting pay instead of laying people off

slantedview 4y ago
Cutting pay to keep the company afloat is very different than cutting pay to give a dividend.

wayeq 4y ago

I've never shorted a stock before but this is tempting.

jay-barronville 4y ago
Very tempting.

photonbucket 4y ago

They have to cut the dividend, this is bananas

osigurdson 4y ago

I'm not an Intel shareholder (outside of ETFs maybe) but I would be far more interested in their stock if they cut their dividend entirely and invested 100% of earnings back into the business. Hire the best talent, become the kind of place where the best talent wants to be. Stop being a stodgy, old, risk averse has-been. I would really like to see Intel make a comeback but this dividend preservation move suggests they no longer believe in their own company.

baq 4y ago
It needs to die inside first. There’s been hope with Pat but the results are here and it’s just more of the same. The purge is needed and looks like it’s finally coming, at least 5 years too late, but look at where AMD has been before. It’s a high risk high reward mun or bust play.
khyryk 4y ago
Xe-HPC wasn't a risk-averse design, nor was Arc, nor was Alder Lake, nor was Sapphire Rapids. The only problem is that Xe-HPC is nowhere to be found, Arc was delivered 2 years late and buggy, and Sapphire Rapids was at least 1 year late; only Alder Lake delivered on time and without major problems. Thus, the problems came from poor execution. 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.

Kilonzus 4y ago

Ok keeping the dividend aside another way to look at this is instead of layoffs they insituted a pay cut for everyone with senior personnel taking more of the effect. Of course questions arise of what headwinds are they really facing or are they just taking advantage of the current rhetoric but either way I am a fan.

recursv_thnkng 4y ago
They did this pay cut on top of a layoff

mrtweetyhack 4y ago

[dead]

wly_cdgr 4y ago

Not working long nights and early mornings is not "phoning it in". It's having healthy boundaries as a sane and self-respecting adult.

irrational 4y ago

I know a lot of Intel employees. I've been asking them if they have been worried based on stories of layoffs, but they have all been upbeat about their jobs. None of them seem to have seen this coming.

baq 4y ago
It’s amazing how little people care about the 10-Q. It’s literally the most important document every quarter. Every single shareholder hence employee should read it every time a new one is released. The writing was on the wall, for everyone in plain sight.

saos 4y ago

shareholder > employees.

TheRealPomax 4y ago

> Intel’s leadership has decided that the dividend is more important than employee retention 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.

fnordpiglet 4y ago

Once you let accountants make decisions any company eventually gets to this point. Accountants are wonderful human beings who know the price of everything and the value of nothing. Source: I’m married to one.

LarsDu88 4y ago

If they cut dividend, the stock craters and employees with tons of Intel Equity get hammered far more than whatever Intel is cutting in salary.

User23 4y ago

Kodak did this once. We all know what happened after.

tommilukkarinen 4y ago

"This was an incredibly dumb move, as employees will become “quiet quitters” and lose morale." 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.

jnsaff2 4y ago
I’m sure that’s the MBA type rationalizing going on Intel. 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.
baq 4y ago
MBAs and bean counters ran this company into the ground in the first place. I’m sure the chain of decisions makes perfect sense given circumstances, but there was no vision to actually do anything seriously other than keep printing money. Lo and behold risk happens slowly then all at once.

wolverine876 4y ago

As many SV companies follow the 'bossism' trend and treat workers worse, who is taking the opportunity to attract the more dyanamic, motivated workers who want something better?

impossiblefork 4y ago

I don't really see how this can work out. 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.

neilv 4y ago

The timing coincides with all the "big tech" layoffs. Is this also a way to reduce headcount, but without the cost of severance packages?

valenterry 4y ago

Not based in US, but I'm curious: is this legal and can it be done? Or is it more like "if you don't take the pay cut we'll fire you" and this works because of hire&fire culture in the US?

Clent 4y ago

We have new words for this now. Headline should read "Intel quiet firing workforce to please shareholders"

Rafuino 4y ago

Ugh, I feel bad for all my former coworkers. Pat was supposed to be the returning savior of Intel and now I'm hearing rumors he might not last through 2024 at this rate. The thing is, even if Pat goes down, Intel is too big to fail for the US from a national security POV. While TSMC is starting to build more fabs in the US, they're doing it kicking and screaming, and the funding in the Chips & Science Act is just a drop in the bucket for now. I fully expect more semiconductor industrial policy from the US gov in the next 10 years. It's a good time to be in semiconductor policy at Intel, SIA, etc. etc.

albert-thomas 4y ago

Dylan's analysis here is spot on. I think this might go down as the worst decision in Pat G's tenure as CEO.

s3p 4y ago

*Upper level employees, not the lower level.