Intel Buying Back Stocks to Hide Declining Growth

[Bombastinator]

2 hours ago, porina said:

Who says Intel aren't investing? I'm not interested enough to dig through reports, but my guess is they're burning enough money on 10nm and beyond that they're at a point where throwing even more at it isn't in their best interest as diminishing returns kick in.

 

Share buyback is not unusual in the finance world, which often doesn't make sense to normal people outside of it. It really is as simple as you do it if you have a load of cash sitting around you don't have anything else to usefully use it on. It is a direct manipulation of the share price, but it is a legal one that is done in the open.

Who says they aren’t?  No one.  They’ve got a LOT of money.  They’re allowed to do more than one thing at once.   They’ve been burning money specifically on 10nm for years though.  I’m not saying stop as it’s starting to appear that they may get at least something out of it even if it’s not much, but the 3990x seems to have stolen a march.  This may not be the only year they have to do stock buybacks to maintain share price, and that’s a pot of money with a bottom.  They’re going to have to find something clever, and that takes both money and luck.

[pas008]

25 minutes ago, Bombastinator said:

Who says they aren’t?  No one.  They’ve got a LOT of money.  They’re allowed to do more than one thing at once.   They’ve been burning money specifically on 10nm for years though.  I’m not saying stop as it’s starting to appear that they may get at least something out of it even if it’s not much, but the 3990x seems to have stolen a march.  This may not be the only year they have to do stock buybacks to maintain share price, and that’s a pot of money with a bottom.  They’re going to have to find something clever, and that takes both money and luck.

everyone just looks at cpus

intel is in alot

ai, storage, memory, quantum, networking, graphics(discreet soon) data centers etc etc

 

they really dont need luck

on their cpu side they can just do the gluing again like before, but now we might be see gluing with stacking

 

 

[Bombastinator]

22 minutes ago, pas008 said:

everyone just looks at cpus

intel is in alot

ai, storage, memory, quantum, networking, graphics(discreet soon) data centers etc etc

 

they really dont need luck

on their cpu side they can just do the gluing again like before, but now we might be see gluing with stacking

 

 

Quantum?  Digging kind of deep..  storage I’ll definitely take. Memory and networking may be bigger than storage.  Data centers, may be meh.  Luck they might need to get back out in front in CPUs though.  How much of their business is CPUs is a pretty good question though.  If it’s like 20% this whole thing is silly.  If it’s like 70% it totally isn’t though.

[Brooksie359]

Honestly until intel starts to hurt in the mobile market I think they will be fine. Laptops make up a huge portion of their cpu sales and if that goes then they are in big trouble. 

[pas008]

7 minutes ago, Bombastinator said:

Quantum?  Digging kind of deep..  storage I’ll definitely take. Memory and networking may be bigger than storage.  Data centers, may be meh.  Luck they might need to get back out in front in CPUs though.  How much of their business is CPUs is a pretty good question though.  If it’s like 20% this whole thing is silly.  If it’s like 70% it totally isn’t though.

https://www.intel.com/content/www/us/en/research/quantum-computing.html

 

many articles on quantum if you want more

 

intel has stated many times its looking to get 30% of silicon tam, brian said same thing before it

 

https://www.tweaktown.com/news/69157/intel-ceo-bob-swan-interested-holding-90-cpu-market-share/index.html

[porina]

1 hour ago, Bombastinator said:

Who says they aren’t?

I only questioned it since you implied it in the post I was replying to.

 

1 minute ago, Brooksie359 said:

Honestly until intel starts to hurt in the mobile market I think they will be fine. Laptops make up a huge portion of their cpu sales and if that goes then they are in big trouble. 

With the recently release of Zen 2 mobile CPUs, I think that's going to really start eating into Intel's pie like it did on desktop. As with many things, it wont be overnight and it'll take time to build up momentum.

[Bombastinator]

15 minutes ago, porina said:

I only questioned it since you implied it in the post I was replying to.

 

With the recently release of Zen 2 mobile CPUs, I think that's going to really start eating into Intel's pie like it did on desktop. As with many things, it wont be overnight and it'll take time to build up momentum.

There’s going to be numbers somewhere about how much they sell of what and how much of their total business it is.  These numbers don’t seem to have come up much yet which leads me to believe AMD might be gnawing in the back of a giant.  It wouldn’t really change anything.  AMD could still make their place.  Might even be easier.  All these have to do is convince the giant that getting cpu share back is more trouble than its worth.  That may be what the 9950x was about.

[Demonking]

All of em are doing stock buy backs especially with the tax cuts they got.

[porina]

9 hours ago, Bombastinator said:

There’s going to be numbers somewhere about how much they sell of what and how much of their total business it is.  These numbers don’t seem to have come up much yet which leads me to believe AMD might be gnawing in the back of a giant. 

If you mean the high level stuff, you can find it in financial reports, or people's summary of them like following for example.

https://www.anandtech.com/show/15433/intel-q4-fy-2019-results-record-quarter-record-year

 

If you mean more detailed product level, most companies never release that and any information is gathered by others using other sources or methods, and should be treated with appropriate caution when interpreting. e.g. MindFactory data that periodically gets released, or even changes in Steam Survey results.

[vanished]

Didn't think this was news, I heard about it at least a month ago now if not more.  It's funny but not unexpected.  Even they must realize on some level they are utterly failing at the moment and lack the ability to pull themselves out of that hole in a timely manner, so they've resorted to this hoping people won't notice.  Judging by the number of people who were unaware, as well as the fact they've managed to hold their share price high when by logic it should have done the opposite of what happened to AMD, I guess it's been working.

[vanished]

20 hours ago, TempestCatto said:

I wish I could by myself back and declare myself financially stable

You'd have to sell yourself first which just seems like it would go badly no matter how you interpret that

[TechyBen]

21 hours ago, TempestCatto said:

I wish I could by myself back and declare myself financially stable

You can, it's call paying off bills instead of going out drinking friday night... and saturday.

[Guest willies leg]

Not a good sign. IBM and General Electric did this for years.

[mr moose]

A company buying it's own stocks back means nothing,   However when a company sells of it's divisions/assests is when there is a problem.

[Lakobrija]

Can someone explain to me what intel gets by buying its own stocks? Is it like I spend my own personal money into my own company? When I invest into my company stocks and they increase in price does that mean I profited? Is buying own stocks just a trick to crew people looking into the charts?

[mr moose]

7 minutes ago, Lakobrija said:

Can someone explain to me what intel gets by buying its own stocks? Is it like I spend my own personal money into my own company? When I invest into my company stocks and they increase in price does that mean I profited? Is buying own stocks just a trick to crew people looking into the charts?

Essentially they get to have the benefits that being stockholder brings.   It makes them a little more autonomous (kinda but not really) and also keeps stock prices higher in a trough. 

 

EDIT: to be honest there is probably also a whole heap of reasoning and other shit that we internet plebs haven't even thought of, but on the surface what I said above.

[Sakkura]

5 hours ago, Ryan_Vickers said:

Judging by the number of people who were unaware, as well as the fact they've managed to hold their share price high when by logic it should have done the opposite of what happened to AMD, I guess it's been working.

Converting cash on hand to a higher share price isn't unusual. It's just not something you can do for long.

22 minutes ago, Lakobrija said:

Can someone explain to me what intel gets by buying its own stocks? Is it like I spend my own personal money into my own company? When I invest into my company stocks and they increase in price does that mean I profited? Is buying own stocks just a trick to crew people looking into the charts?

It gives money to Intel's owners. As a publicly traded company, generating value for the shareholders is a primary objective. This also means Intel isn't screwing anyone. In effect, each shareholder owns a bigger percentage of the company.

 

It doesn't do much for Intel itself. But neither does a big pile of cash just sitting around. Another option would have been to invest it, but sometimes you're already spending as much as makes sense, spending more money isn't necessarily going to be worth it.

[vanished]

5 minutes ago, Sakkura said:

Converting cash on hand to a higher share price isn't unusual. It's just not something you can do for long.

It gives money to Intel's owners. As a publicly traded company, generating value for the shareholders is a primary objective. This also means Intel isn't screwing anyone. In effect, each shareholder owns a bigger percentage of the company.

 

It doesn't do much for Intel itself. But neither does a big pile of cash just sitting around. Another option would have been to invest it, but sometimes you're already spending as much as makes sense, spending more money isn't necessarily going to be worth it.

To me it seems like trading long term success for the appearance of success in the short term.  Rather than investing that spare cash into R&D which they seriously need to catch up to AMD, they're spending it on what I'd consider artificially inflating the share price.  If they made a better product, it would come up because they're actually worth it.  Either way, the share price stays high and the money gets spent.  Just, one is more sustainable than the other, as you alluded to.

[pas008]

2 minutes ago, Ryan_Vickers said:

To me it seems like trading long term success for the appearance of success in the short term.  Rather than investing that spare cash into R&D which they seriously need to catch up to AMD, they're spending it on what I'd consider artificially inflating the share price.  If they made a better product, it would come up because they're actually worth it.  Either way, the share price stays high and the money gets spent.  Just, one is more sustainable than the other, as you alluded to.

See your mind set is just cpu

 

Intel has become way bigger than cpus

 

Look at all their products

Their r n d budget is huge

Because of many products

 

Catch up to amd?

They already have the technologies to glue stack amd all above

Just not implemented yet because like anything else they go slow

[mr moose]

6 hours ago, Ryan_Vickers said:

Rather than investing that spare cash into R&D which they seriously need to catch up to AMD, they're spending it on what I'd consider artificially inflating the share price.

 

AMD only just over took them and regardless what happened with 10nm, that was because AMD are doing what they should be, unless you think Ryzen was a failure and Intel not beating it right now is an even bigger failure? 

 

Given Intel already outspends AMD on R+D by 10x  ($3.38B to $310M) it's a bit hard to think that adding more to it is going to make any difference.  The reality for Intel is that if it would,  they would have done it already. 

[Sakkura]

9 hours ago, Ryan_Vickers said:

To me it seems like trading long term success for the appearance of success in the short term.  Rather than investing that spare cash into R&D which they seriously need to catch up to AMD, they're spending it on what I'd consider artificially inflating the share price.  If they made a better product, it would come up because they're actually worth it.  Either way, the share price stays high and the money gets spent.  Just, one is more sustainable than the other, as you alluded to.

Intel is already investing much, much more in R&D than AMD is. There are some problems you can't fix by just throwing more money at them.

[Kisai]

On 2/7/2020 at 7:49 AM, GodSeph said:

Weird that is allowed. I guess you learn more everyday. I assumed Stock buyback is illegal or at least was illegal...Doesnt that create a fake pricing which in theory could collapse??? Dont wanna go off topic too much but that sounds silly to allow something like this , But I could be wrong...

Nope.

 

Naked Short Selling is illegal.

 

Stock Buybacks is the company literately buying their own stock on the open market, and it ultimately screws investors betting the company will fail. However all it really does is prop up the stock price which allows dividends to be higher.

 

Short selling is where you sell stock that someone else owns and bet that the stock price loses value, so you can then buy it at that value. The losses are potentially infinite. Naked Short Selling is doing this without first borrowing the stock. It's the fastest way to destroy both the target company AND the investment company so that's why it's illegal to naked short sell. 

This was one of the things that had the consequences of the 2008 financial meltdown involving Bear Stearns and Lehman Brothers.

 

Stock buybacks however do not involve short selling, ultimately they destroy short sellers positions and cause the price to pop back up when short interest disappears. However companies are restricted in the amount of stock buyback they can actually do.

 

Apple buys back their own stock regularly. It's something you pretty much have to do if you give your employees any kind of RSU (Restricted Stock Units), since employees will sell them on the open market or are required to sell them upon quit/fire/retire.

 

[vanished]

8 hours ago, Sakkura said:

Intel is already investing much, much more in R&D than AMD is. There are some problems you can't fix by just throwing more money at them.

Evidently.  Although that calls into question what is the answer?

[Bombastinator]

3 minutes ago, Ryan_Vickers said:

Evidently.  Although that calls into question what is the answer?

42.  The question is the tough one though.  Intel is a lot lot bigger than AMD.  Desktop gaming CPUs are only one market they are in.  Intel can throw money at R&D and hope they get lucky (Polaroid did this for 30 years and got basically nothing because every time a researcher found something worth anything they would hide it, quit, and pop up later with it somewhere else) they can concentrate on other aspects of their business and cede the field to AMD, or they can concentrate on other parts of their business WHILE continuing to do R&D and maybe find a way to hit back.  Intel is huge like that apparently. 

[DaRk0]

On 2/7/2020 at 4:49 PM, GodSeph said:

Weird that is allowed. I guess you learn more everyday. I assumed Stock buyback is illegal or at least was illegal...Doesnt that create a fake pricing which in theory could collapse??? Dont wanna go off topic too much but that sounds silly to allow something like this , But I could be wrong...

Actually no. You'd be surprised but a big portion of transactions related to stocks are buybacks. Companies do it because debt is cheap, so they use credit to buy back their stock and drive the value up.