Intel is trapped. Its debt repayments alone are massive. The poor performance in stock has encouraged 20years of wage stagnation to the point where you can literally earn over 50% more at amd or nvidia or even an startup for equivalent roles so they aren’t hiring the best. Their pay in the Bay Area is double tsmc in taiwan for equivalent roles in raw dollar terms but the ppp differences means your better off working for tsmc in Taiwan than intel in the Bay Area. That’s not a joke. Intel are literally incapable of attracting talent from Taiwan right now.
They don’t have the talent they need and the debt trap and poor performance means a lot of push back to the needed doubling of wages to attract that talent. It’s a very hard sell for any exec trying to correct this problem. They sidelined lip bu tan who was one of the advocates for even more layoffs and wage freezes but he’s one of many backwards thinkers they need to remove. It’s going to be difficult to fix their board.
Without talent intel has no hope of winning and they can’t get that talent due to poor stock performance for the past 20years leading to executives and shareholders wishing to implement the opposite of what they need right now. In fact they have ongoing layoffs right now. A true downward spiral and the only real hope is for a newcomer to step up.
I worked there for a few years a little over a decade ago in Oregon. The wages were abysmal, so you're not wrong, but they still drew a lot of good talent because Intel was more accessible to the suburbs than the city of Portland (commuting to downtown Portland was awful) and remote options were limited. Krzanich era layoffs and the availability of more remote work options resulted in a rapid drain of talent though.
The working environment was toxic (still is based on what I've heard from folks I know working there). It encouraged working against your peers instead of with them. Top heavy management meant lots of poor choices and money burned on worthless projects that never saw the light of day. Always had the looming threat of layoffs which ate into morale. TONS of off-shoring and third-party contracts, which everyone here knows is a mess in itself. Piss-poor research before buying up smaller companies or doing joint-ventures. Pouring money into the construction of more buildings when so many of their current ones sit unoccupied. It's all just a recipe for immense failure.
I worked there on a contract while they were building a phone and had as many as six managers over six months. One of them would come in at 11, talk to me about nothing until lunch, then come back after lunch, talk more, and go home. I had to come in early to get anything done.
When I was toward the end of my project and sure I wasn’t going to try to get a blue badge I laid into someone in a meeting. It wasn’t my best moment but I had absolutely had it with this person from a competing group blocking my progress. I was on my way out anyway. I wasn’t sure if I would be fired.
The manager from the competing group sought me out the next morning to offer me a L6/L7 position. He said he wasn’t sure I had what it took until that meeting.
This is a great indicator of how it's often presented as collaborative or even slightly-"woke" on the outside, when in reality, advancement is cutthroat. But conducted in an cliquey/politically repressive atmosphere where everyone is afraid to act like that, but when someone has the courage to start speaking their mind, the rest look to them as the one who can save the malaise from the stagnation.
I wonder how it became a culture so afraid of itself. How did Amazon (possibly no less "toxic", Idk) embarrassed combative disagreement and sublimated that natural emergent expression/desire during stressful situations into something that worked for the company, whereas Intel sounds like it failed to do that?
How did Amazon (possibly no less "toxic", Idk) embarrassed combative disagreement and sublimated that natural emergent expression/desire during stressful situations into something that worked for the company, whereas Intel sounds like it failed to do that?
All that worked (or seemed to work) for Intel for many years - 30+ years of profits and market dominance. I don't know the exact abuse level of Amazon, Microsoft, Apple or wherever but if they're equivalent, they'll keep going 'tell they stop.
The one thing toxic culture seems to do is prevent recovery when a company suffers a setback.
My gosh you can read the posts on this thread of myself and others talking about the toxicity of Intel's culture in the 90s.
If you're in doubt, I'd recommend David M. Gordon's Fat And Mean for a discussion of how toxic culture persists and intensifies in corporate America.
Edit: I think can credit the long period of success Intel had to shrewd leadership and leading in a massively expanding market. The thing about a chip company is that it is constantly gambling on extremely costly investments in machinery and people. Abusive tactics that get good people working really hard for average salaries are really useful and "only come due over time" and often when the company foundering anyway.
I believe that any successful company is like that. There are always people that have a vested interest in pretending otherwise but that's just to avoid other people succeeding or to present a good front.
As far as I'm concerned there is no other way to get real progress; there are always a lot of pretenses on better ways to "manage" stuff but they never work because of group dynamics and basic human behavior...
It's grim at INTC but don't forget the CHIPS act and whatever else will follow that. The US government spends 0.5T per month - more than the market cap of all but the top 15 American companies [0] [1]
Not saying it's a good or bad idea, or that it will or won't happen - but if the US government decides to reinvent Intel, they can easily write a cheque that (if spent wisely) might do the trick.
Intel is underserving of this investment and the chips act has no teeth to ensure that they follow through and build these facilities and create jobs. They will not follow through and spend the money wisely and that was clear from the moment that bill was drafted.
>It's grim at INTC but don't forget the CHIPS act and whatever else will follow that. ... if the US government decides to reinvent Intel, they can easily write a cheque that (if spent wisely) might do the trick.
I suspect the result of the CHIPS money going to Intel would be Starliner from Intel (btw, Starliner did meet all the development milestones set by the government, yet here we're). Rotten overbloated corporate managerial bureaucracy can digest any amount of money you throw at it, and it will make it only more rotten and overbloated.
Because you shouldn’t reward bad investors. Just wiping their debt without changing all of management will just result in the same problem in 10 years.
Better for Intel to sell off chunks to competent companies either voluntarily or through bankruptcy.
Because then it couldn't be a morally - now literally - bankrupt company that is nothing more than a shell of the existing company large enough that it being a complete puppet company of the neo-industrial intelligence apparatus is not a viable idea to anyone but the most extreme of Bell-end dwellers.
I think this contains mostly correct analysis with respect to hiring experienced talent, but under emphasizes how unique each process is per company. Experience is a positive, but less positive because of it.
There is a lot of potential that could be made from newer hires combined with focused in house training/experimentation - which is what all these businesses had to do in their initial expansion - with not enough people of experience at scale available, and they probably had to do a running training ramp up multiple times over multiple generations of growth. This is in general is an underutilized strategy - esp for mature companies that need to essentially build a new generation of tech in-house.
You can trade your stock for intel stock when working at any company. Stock grants really should be swapped for income and reinvested how you see best. So ultimately the total take home income is what should matter for any new hire. Take the higher paying and job and buy intel stock if you believe it’ll rise.
Most stock vests over time though. I can't trade it immediately, and the value may drop between when I get the grant and when I can actually sell the shares.
Intel stock is as high as it was 15 years ago when they had total market domination. Now they are at the brink of collapse.
The market is way bigger today but still, I would take a dominant player over a failing one every day.
Another way to look at it: Intel market cap is 83B, AMD's market cap is 228B. Do you think Intel is expected to make 1/3 of the money AMD is going to make in coming decades? I see no reason to be as optimistic.
> Another way to look at it: Intel market cap is 83B, AMD's market cap is 228B. Do you think Intel is expected to make 1/3 of the money AMD is going to make in coming decades? I see no reason to be as optimistic.
Nit: market cap is not earnings. That's stock price * shares outstanding.
Intel's revenue is 54B to AMD 22B. If Intel's CPU division was spun off, I see little reason to believe AMD deserves a 3x premium to that - and you get IFS with Intel as well right now!
Granted, IFS is the millstone hanging around their neck right now, unless they can fix it.
Yeah but market cap is at least in theory about how much money a company is going to make in the future. Not this year, not the next year but decades is already pretty close (because of the discounting).
sotck can be low because it's undervalued by the entire market and going to jump once they catch up to the future value potential, or it can be low because it accurately reflects the decline and limited value. If you only see the "attractive perk" from being so low you're the one using historical performance as the indicator, thinking Intel's only a few quarters or years away from former glory days.
Efficient market hypothesis dictates the price accurately reflects valuations. So if a stock price is down relatively, it's because the wealth of information available on it indicates its decline.
I too, used to be a dyed in the wool boglehead that believed in efficient markets. The missing small cap value / international premium over the past twenty years has me convinced otherwise today.
To put the US equity outperformance of the last 15 years in perspective, US equities historically have outperformed non-US equities by 2.3 percentage points annualized since 1926 and by 2.7 percentage points in the post-WWII period. In our strategic asset allocation models for clients, we assume one percentage point of outperformance annualized [0]
Not sure this really breaks the idea of small cap vs large cap (since there's been swings and reversals in that in just the past 15 years IIRC), just the international equity differences.
Also, just going to note that 20 years is really not that long and it's reasonable for valuation swings to take that long to reverse.
> allow to select the purchase price within the last 2 years
I don't think that's true. My reading of that is "you lock in the price on your start date and can keep that for the next 2 years going forward". That doesn't help anybody joining at >$1k / share. :D (and that's only ESPP, not standard stock compensation).
ESPP is a very small amount vs RSUs. You’re limited to buying $25,000 per year (that you still have to shell out for even if it’s at a discount) vs just being given several hundred thousand (or more) in RSUs.
Their revenue is >twice AMD's. If IFS disappeared they'd probably have a better valuation than they do right now solely based on processor performance, but their success in the foundry business is probably contributing negative value to their market cap (presumably because it's soaking up so much cash for nil returns)
Intel upside right now is possibly very high, if they can fix the foundry. Their current stock is pricing in complete catastrophe, rightly or wrongly (TSMC is priced at 750B mkt cap, for perspective). Yes, intel isn't as successful as TSMC right now, but only ten years ago intel foundry was better than TSMC.
I don't know where they'll go. But I feel you have much better risk/reward with intel right now.
And it seems like they don't have a whole lot to fix to be back on top or at least extremely competitive.
They know how to run foundries, they just need to catch up on the tech side, it's going to take a bit of time and cash but it's not like if they don't have experience doing it previously.
On the chip design side of things, they seemed to have almost caught up (at least to AMD/Qualcomm, Apple is another story) because their upcoming low power laptop chips generation looks like it will be very competitive in terms of power per watts. And they benefit from years of refinement in the software side as well as quite competitive GPU stack, people seem to forget too easily but AMD products still have many annoyances that Intel ones just dont (recently WIFI issues on their latest laptops) and Qualcomm is a no go unless you do browser-based stuff for the most part.
I don't understand people giving up Intel for dead, because even at their worse in the past few years, they were still competitive, both in performance and price; once they figure out the process and design (seems to be on good way) I would worry a lot more about the other side of competition, but who knows...
That can also mean they haven’t done asset writeoffs they should have already done in previous quarters.
If you have billions in obsolete equipment you can technically get away with not doing an asset write off so it doesn’t show in the books of current quarterly performance. Just claim it’s not actually obsolete yet. It catches up eventually though.
So the above may be more of a timebomb than a value signal. It can indicate that Intel hasn’t written off ~$40billion of assets it should have and it would seem a lot of investors are aware of this. They are already losing $10billion a quarter without counting those write off so I understand the hesitance.
I mean, I have a lot more confidence that nvidia will continue to deliver products to a market that wants to pay for them over Intel at this point in time, even if the stock is likely to come crashing back down to earth soon. As an employee, I wouldn't really factor in stock performance necessarily, but the overall image and outwardly visible struggles Intel is going through tells me the internal struggles are probably far worse than the public or shareholders know.
I think if Intel was a private company then it would have a better chance of recovery via a collection of focused experiments to overcome their biggest technical deficiencies (compared to their competitors) or to, e.g., figure out a compelling new product that the market didn't realise it needed, but that doesn't require solving difficult physics problems.
But to do this sort of thing you need a dictator at the top who is willing to risk a run of negative-profit quarters to fix the company's underlying rot. If you try to do anything like that as a leader of a public company, then shareholders tend to get angry.
I wonder if there's any lesson that could be distilled from the (minority of?) public companies that don't end up settling into a pattern of carefully-managed mediocrity. Is there a unifying theme? I haven't spent enough time thinking about this to even propose an answer other than "cult of personality around the leader" as maybe helping.
> But to do this sort of thing you need a dictator at the top who is willing to risk a run of negative-profit quarters to fix the company's underlying rot.
Private companies still have shareholders that the CEO answers to -- who tend to get angry at taking losses quarter after quarter with no clear path to growth.
I think the company always paid "industry standard" compared to other companies paying actually well. And it was a terrible place to work by most objective measures - people got let go quite freely, etc. When Andy Grove writes a book called "Only The Paranoid Survive", he's not committing to employee loyalty.
I think the way Intel got good people, and they did get good people, was by a combination of the opportunity to build something that gets widely used and a cult-like spirit of "are you good and tough enough to survive the bullshit".
But yeah, seems there's no recovery when that approach stops working. And it's disturbing that many of America's "crown jewels" (Intel, Boeing, etc) are basically constructed that way.
They sidelined lip bu tan who was one of the advocates for even more layoffs and wage freezes but he’s one of many backwards thinkers they need to remove.
Genuine question: why isn’t what they need large layoffs and dramatic wage increases?
Intel's debt is not bad at all. My reading has it at $53 billion. Before their revenue collapsed in the last few years that debt is only about 50% of revenue. High but manageable compared to att or warner discovery who actually have unmanageable debt. Intel's problem is that revenue is decreasing, and quickly.
They don’t have the talent they need and the debt trap and poor performance means a lot of push back to the needed doubling of wages to attract that talent. It’s a very hard sell for any exec trying to correct this problem. They sidelined lip bu tan who was one of the advocates for even more layoffs and wage freezes but he’s one of many backwards thinkers they need to remove. It’s going to be difficult to fix their board.
Without talent intel has no hope of winning and they can’t get that talent due to poor stock performance for the past 20years leading to executives and shareholders wishing to implement the opposite of what they need right now. In fact they have ongoing layoffs right now. A true downward spiral and the only real hope is for a newcomer to step up.