[wbkang]

Strictly speaking that's not true and, it's not fair to call it a dumb article.

Corporations are supposed to what's best for the shareholders. Milton Friedman equated it to maximizing profit, but it's not necessarily so.

Even if you assume that the profit is the sole reason for the corporation, it's not clear laying off 20% worker would necessarily lead to maximizing shareholder profit in the following years (e.g., it could lead to stifled innovation, lower employee morale, etc).

[stu2b50]

It’s not necessarily clear, but it’s also definitely not clear that the layoffs will be detrimental to the company either. The title of these types of articles implies that the dividend and the layoff are at odds with each, which they aren’t.

[wootland]

I think unless you're firing the executives that overhired, you're not fixing the root cause of the problem which is bad leadership. There's a "hack" that's causing the market for leadership to be highly inefficient and distorted and that's class solidarity between the upper classes. Executives are mostly placed for the favors they can offer capital owners, not their "performance".

[stu2b50]

Making a mistake is not in-it-of-itself a problem. Mistakes are inevitable, if nothing else because people cannot be oracles. If you bet into the river because you have a flush draw, you'll lose around 75% of the time - but that doesn't mean it was a mistake in those 3/4s of a time.

If as a board you unduly punish executives when bets they make don't pan out, you risk causing a culture of fear that prevents innovation and big bets.

Obviously there's a limit, and the reasoning is important behind the bets.

That being said it's not like all of the tech ceos were perfectly competent - that's not what I'm saying. But the knee-jerk "well, fire them too" reaction from the internet is mostly an emotional response.

[wootland]

If the executives are "just human" then they should be paid like humans along with everyone else. They shouldn't have their cake and eat it too. If you get paid orders of magnitude more than everyone else, you should take on orders of magnitude more risk (including going to prison when the company breaks the law).

[stu2b50]

That's not really a correlation that exists anywhere else. A white collar office worker on average makes significantly more than a blue collar worker but they don't particularly take more risk or anything.

People are paid based on opportunity cost. Executives are paid very highly because the cost of them making a poor decision, or not making a good decision, is very high. Meanwhile, the cost of hiring me and me not performing to expectations is low. It's not because they're God's or anything. The supply of people with leadership experience is also definitionally low.

Of course there's a lot of old boys club in executive roles in reality but that's the boards and shareholders problem when they do a bad job.

[CHY872]

I've seen a few 'old boys clubs' form, and the conclusion I've come to over time is that a large part of this is due to two characteristics. The first is that it's very hard to find credible talent. Think about the people you've worked with - there's probably 100+ or so of them, yes? Now think of how many of them you think are really exceptionally good. Probably only a few, even amongst people with the same role, and it likely took you quite a while to realise that. So, when you come to hire someone, you look at your network, because you've worked with a lot of people, and have opinions on who is and is not good. You simply have more information. The second is that once in a more senior role, it's much harder to judge whether a peer is doing a good job or not, because you don't see a lot of their work and you're likely more reliant on self reported state of world. That tends to weaken your decision making ability on the above, while heightening the importance of doing it correctly. Neither of those things are excuses, but they're certainly reasons. I think it's relatively straightforward to find incompetent executives who've wasted money and who are known for this.

[zaroth]

A layoff doesn’t mean you over-hired for the market conditions which were present when the hiring happened.

And under-hiring today because your crystal ball says market conditions will deteriorate in the future is also not always the best course of action.

The myriad causes which lead Intel to this point exist at many levels from individual, corporate, competitive, and macroeconomic.

It’s overly reductive to assume a layoff is due to some mistake, that a layoff is due to over-hiring, or that a layoff’s root cause is the executives who mapped out a past hiring plan.

For starters, the hiring plan will be based on revenue projections which will be based on technical market analysis overlaid with a technical roadmap. This is a distributed effort and major analysis at the level of a corporation like Intel spread across potentially dozens of business units. The hiring plan could easily have been “perfect” based on faulty product roadmaps / product performance projections or any number of other factors.

[harikb]

The only exception here is them taking extra effort to keep dividends high. It is not like they were rolling is cash they don't know what to do with.

> Intel's earnings report for the first quarter of 2023 was one of the worst in the company's history. Its revenue dropped by 36% annually and the firm also posted a loss per share of four cents. These losses came as the firm ensured that its investors were happy and paid $1.5 billion in dividends out of pocket during Q1, keeping the payments nearly similar to the year ago quarter's figures.

[danielrpa]

The management team believes this is the case. They have a lot of information on the company and individual performance. Do you have any reason to believe they are wrong with this particular choice?

[jehb]

I would counter that this suggests the management team believes layoffs will be beneficial to management.

What is beneficial to management may or may not actually be in the best interest of shareholders (and neither incentive necessarily aligns with the interests of either customers or employees).

[anthonyskipper]

The dividend keeps the stock price high, which is good for both shareholders and employees. Cutting employment is how you manage to pay the dividend when you losing money. Not paying the dividend would crash the stock price and make lots of things harder.

If you believe Intel will be profitable again in the near future then paying the dividend really does make sense. Unfortunately there have been lots of companies that thought that was true when it wasn't and the dividend is how they ran out of runway quick.

[ClumsyPilot]

> If you believe Intel will be profitable again in the near future then paying the dividend really does make sense

If you believe your company will be profitable you should reinvest all avaliable capital into the business to grow it.

What you are advocating is contrary to every shred of logic and common sence.

[dragonwriter]

> If you believe your company will be profitable you should reinvest all avaliable capital into the business to grow it.

No, because being profitable doesn’t mean marginal profits from expansion are available. Your plan would have all profitable firms expanding until they collapse from overextension.

[ClumsyPilot]

Sure, this is true for tabacco companies and oil companies that are milking cashcows in a stagnant market.

This should not be true for microchip manufacturer during global computerisation. We now have microchips in sofas and handbags.

[ClumsyPilot]

So you 100% trust the management team is right to fire those people.

A month ago, would you would have believed that management team is right hire these people?

Did they make a mistake when they were hiring or did they make a mistake now when they are firing?

You cant believe both simultaneously.

Alternatively, maybe management team is just out for themselves, doesn't care. , and is just riding the wave. Pumo the share price.

Or maybe they are incompetent, don't know how to apply a large team, are out of ideas on how to invest 1.6 billion dollars profitably.

Now I dont have proof for my hypothesis b, but at least I am mot contradicting myslelf.

[shukantpal]

> Did they make a mistake when they were hiring or did they make a mistake now when they are firing? You cant believe both simultaneously.

No it's entirely plausible that hiring then was the right decision and firing now is the right decision. There's no universal law that says you must hire people for eternity.

[ClumsyPilot]

Facebook literally fired people they hired a week prior.

Why do you feel the urge to make excuses for managerial incompetence.

Like when you are a worker, they must be scruitinised to make sure they arent lazy or incompetent, but the day you get promoted to executive you gain godlike immunity from criticism

[drexlspivey]

It’s not up to you to decide if what the management did is right or wrong, it’s up to the shareholders. They own the company and they appoint the management. If they make bad decisions it’s up to them to replace them.

[ClumsyPilot]

Do they really do it?

In the past 40 years several FTSE 250 companies have collapsed, gone bancrupt or suffered some other disaster.

I can't name any example where shareholders replaced upper management before it was too late. Can you?

[TylerE]

It’s a great way to get all of your good employees to leave (because they will easily line up a new role).

[macintux]

Maybe. There aren't a whole lot of companies who need chip designers (well, who are hiring chip designers; I imagine one could make the case that there are companies out there could do a better job with it).

[wongarsu]

The curse of being in a small industry (in terms of companies, not revenue). On the other hand, with AMD having a good couple years and multiple companies flirting with RISC-V, right now might be one of the better opportunities to find such a job.

[snvzz]

AMD I am worried about, should they not embrace RISC-V, which so far they haven't shown signs of.

They could show up with a RISC-V for a new socket AM6, called Zen7, with x86 acceleration: An actual x86 mode to support legacy applications during the transition to the best and industry standard ISA.

Or they could, alternatively, fall into irrelevance on the CPU side. Which would be a waste.

[tcbawo]

The term over which to maximize profit can be subjective. The present value of future profits is also subjective. I think the answer appears to be “follow then industry trends set by Serious People” and “pay consulting firms to justify the actions I want to take”