Comment by miohtama
2 days ago
Also:
"From 2001-2020, Intel blew $128 billion on buybacks (64% of net income) on top of paying out $68 billion as dividends (35% of net income),” notes Lazonick. That’s money that couldn’t go into innovation, retaining and training employees, R&D, and other critical areas.
https://www.ineteconomics.org/perspectives/blog/america-need...
Intel had a massive R&D budget and 110,000 employees circa 2020. (Vs 12k and 14k for AMD and NVIDIA, both of which have higher market caps than Intel now).
It wasn't a money problem, it was a badly run company on all fronts. When it comes to R&D the sheer magnitude of the money they squandered is legendary. They lost billions on Larrabee, billions on mobile chips, helped invent phase change memory and even made drives with it, and then dumped it for nothing, the list goes on. It's bad management all the way down, and impressively so, considering that many of these initiatives were the right products for the right time just with a horrible execution (massively parallel compute/GPUs launched Nvidia to a 4 trillion dollar valuation, mobile chips are a huge industry, etc). Arguably they needed to streamline and downsize well before they did. They were full on old school IBM level bloat.
The last few years before their implosion was indeed MBA style running the company into the ground (they had a particularly awful CEO during that period), but that was just the capstone on a large decline, during which Intel had massive budgets that they squandered.
I bought optanes, then SSD got so good they blew them off
I envy you a bit. Truly cool and unique next level tech. Always wanted one, even if the product never quite made sense (and a shame that such an interesting piece of technology gets nixed because it doesn't "quite make sense" in the market landscape, but so it goes).
Did they blow it? From a shareholder’s perspective, if you don't have ideas on how to increase shareholder profits through innovation, then buying back shares is the right thing to do.
>From 2001-2020, Intel blew $128 billion on buybacks (64% of net income)
Is that supposed to be a lot? Sure, hindsight is 20/20 and now we know they should have spent more on R&D, but what would be the correct amount? 50% 100%?
"blew" isn't accurate because stock buybacks aren't spending money. That's kind of like saying contributing to an investment account is spending money.
You can sell the stock again, or use it for employee compensation.
No, they are spending money, there is no substantial difference between dividends and buyback here since the companies issue their own stock, so they don't need to buy anything to sell it, they can try to get more money from investors in both cases.
Investment account analogy fails because you're not investing in your own ownership, so there is no "circular" relationship with yourself
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