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In a nutshell, Intel's board was focused on extracting value from the company instead of innovating. While this was going on, compute was undergoing a transform
by deelowe 2y ago
In a nutshell, Intel's board was focused on extracting value from the company instead of innovating. While this was going on, compute was undergoing a transformation as everything transitioned to cloud solutions. By the time they realized, it was too late and the rot had set in. Now the company is full of mediocre middle managers and principles who spend all day playing politics instead of working on real problems.
- ArtTimeInvestor 2y agoboard was focused on extracting value from the company From the company? Extract to where?
- orwin 2y agoTheir own pocket I'd wager. A simple way to check if a board/CEO wants to extract a lot of future value _now_ is to look into their accounting, and especially how they count physical assets. If they count physical assets at their current selling price, you can probably get in long-term. If they count them at their buying prices you might have to worry. If they do 'future accounting', tying into assets their estimated future added value, you can be sure the current owners are extracting the most they can _now_ and will try to drop the bag into futures investors (or ask for a government bailout)
- ArtTimeInvestor 2y agoWhat is the selling price of physical assets? I would think Intel is not a reseller, so they don't buy and sell stuff but rather buy raw materials and then transform them into a CPU? And how would counting physical assets at their buying price move money from the company into the pocket of the CEO?
- orwin 2y agoLet's say Company A buy a machine to engrave CPU 10 millions (no idea of the real cost), half of it with debt. In normal/traditional accounting, you put the selling price of the machine (if you have to liquidate the company) on the side of the asset: let's say 8 millions the first year, and 5 million on the debt side (they bought it with 5 million of investment money, leveraged with debt). Company has 8 millions in assets, 5 million in debt: good ratio, healthy company. Company B use future accounting: it buy the 10 million dollars machine. On the 'asset' side, you put 16 millions: the machine is worth 8, and is expected to earn the company a net profit of 8 during its lifetime. On the 'debt' side, you put 5. 16/5, the ratio is truly excellent. So good even that you can afford to take another 5 millions, and buy share/issue dividends. Now your asset/debt ratio is 16/10=8/5, same as Company A, except either your current shareholders have already reimbursed the initial investment, derisking themselves totally if the company ends up failing. I think you have a Republican primary candidate who used that with his drug company, the company failed to produce anything of value, but only late investors lost anything.
- astrodust 2y ago"Shareholders" meaning "executives".
- whatever1 2y agoBuybacks
- newsclues 2y agoDividends and share buybacks, to shareholders.
- deelowe 2y agoDividends primarily.
- bud_davis 2y agoexactly the same as every other F500 company...
- deelowe 2y agoNvidia says otherwise.
- YetAnotherNick 2y ago> Intel's board was focused on extracting value from the company instead of innovating But then they failed at that as well. Their share price almost never increased after 2000s. Currently they are valued lesser than their 1996's valuation, even if you exclude inflation. Highest they went was $263B valuation in 2021, which is nowhere close to tech giants.
- deelowe 2y agoIntel is a dividend stock. You can't just look at share price.