Intel Buying Back Stocks to Hide Declining Growth

[spartaman64]

On 2/7/2020 at 6:03 PM, pas008 said:

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

we are decades away from an actually useful quantum computer that doesnt decohere the moment someone sneezes within 500 meters

[pas008]

38 minutes ago, spartaman64 said:

we are decades away from an actually useful quantum computer that doesnt decohere the moment someone sneezes within 500 meters

and your point is what?

 

you dont think there is money involved here?

 

 

[spartaman64]

7 minutes ago, pas008 said:

and your point is what?

 

you dont think there is money involved here?

 

 

yep i dont think intel is making any significant money off of quantum computing right now and if anything they are probably losing money if they are actually spending on r&d

[pas008]

2 minutes ago, spartaman64 said:

yep i dont think intel is making any significant money off of quantum computing right now and if anything they are probably losing money if they are actually spending on r&d

they are making quantum chips and horse ridge controller chip too

 

and we dont know so i cant speculate anything

[Bombastinator]

2 hours ago, comander said:

Companies are allowed to sell ownership in themselves so that they can raise funds. Ownership in a company is basically a stock. 

Why shouldn't a company be allowed to buy back the stock? I can recognize that treasuries can abuse insider information but there are some safeguards against that in the law already. 
 

Issuing new shares doesn't make a company more valuable in and of itself. 

Let's say you have a company, NewCo that's worth $10M and it has 100 shares issues in total. Each share is worth $100k. If you split the stock you'd now have 200 shares worth $50K each. Noone's ownership in the company changed. This is just accounting magic and in theory it shouldn't matter (though some people argue that cheaper stocks are easier to trade, which increases liquidity) in any meaningful sense. 

Another scenario - OldCo is worth $20M and has 100 shares. It decides to raise funds by issuing 10 new shares so that there's 110 shares in total. These shares are sold at $200k a piece. The company is now worth $22M (20M original value + 2M in cash from selling shares). No one's equity shares changed in value, though the % of the company owned is now lower. Over time these values will change as the company invests the capital it raised (e.g. investing in new tools or training or paying down debts). This might mess with supply/demand though and the share price might go down a little.

Another scenario - OtherCo is worth $5M (enterprise value + net debts/assets) and has 10 shares outstanding, each worth $500k. It buys back 1 share and retires it. OtherCo now is worth $4.5M and has 9 shares outstanding, each worth $500k. This is a share buy-back. 
In some cases the buy back will mess with supply/demand and the share price might go up a little. 

Some complications occur when the shares are sold at a significantly different price OR if the company is unable to sell all of them. This is beyond my knowledge. I've never worked on Wall Street and I ended up skipping the whole Harvard MBA thing when I got where I wanted without it. 

It could I guess create some possibly weird effects if taken to extremes.  A company that has its own controlling interest would be an odd animal.  Goes to the odd thing about corporations having a degree of personhood.  It made a bunch of things work more conveniently but it also caused some serious problems.

[Bombastinator]

5 minutes ago, comander said:

Some companies DO have controlling interest in themselves. 

One interesting example (not quite the same because they had some private equity money going in):
Dell did a major stock buy-back and went private for a while. 
https://www.forbes.com/sites/connieguglielmo/2013/10/30/you-wont-have-michael-dell-to-kick-around-anymore/

 

Corporate person-hood is a tricky concept philosophically and it has its tradeoffs. 

Who owned it when it went private?  All companies start private.  It’s not so much the company selling itself as the owners of the company selling a part of the company on the open market.   Iirc The owner of google  famously only ever sold a small percentage of the company and later regretted it because he started getting constantly attacked and sued by one or two asshats who insisted the company do whatever it took no matter how ugly to increase profit.

[Bombastinator]

Not on NASDAQ or the New York Stock Exchange they can’t.  I’m not sure if a company that starts “public” can ever even get on those exchanges.  It part of their rules.  There are lots of exchanges.  It’s just that no one ever hears about them.

[Bombastinator]

16 minutes ago, comander said:

This is getting out of my wheelhouse but I wouldn't be surprised if given enough financial engineering you could make it happen. Imagine a company listed on the chinese stock market (state owned venture) and then has a major portion of it acquired by another company and... years later ends up getting absorbed by a US company. 

I wouldn't want to be the guy who has to do the legal work or the due diligence for that, but it is plausible. 

There's also cases of spinoffs...

I don't doubt that what you're describing is correct in 99% of cases. As stated "always" is a strong word and I'm being pedantic. 

It’s kind of out of mine as well.  The securities and exchange commission would know though.  The SEC is the cops for that stuff.

[LAwLz]

I love how this forum jumps to conspiracy theories at the drop of a hat, especially when it involves something negative about Intel, Nvidia or AMD.

Someone releasing security issues about AMD products? It's a conspiracy to make AMD look bad! Probably Intel's doing!

Intel buying back some stock? It's a conspiracy to cover up losses, even though all the info about operational revenues and such are completely out in the open for anyone to see!

And so on and so forth...

[Bombastinator]

1 minute ago, LAwLz said:

I love how this forum jumps to conspiracy theories at the drop of a hat, especially when it involves something negative about Intel, Nvidia or AMD.

Someone releasing security issues about AMD products? It's a conspiracy to make AMD look bad! Probably Intel's doing!

Intel buying back some stock? It's a conspiracy to cover up losses, even though all the info about operational revenues and such are completely out in the open for anyone to see!

And so on and so forth...

Not disagreeing. It is the internet still though for all it being a slightly cleaner and nicer section of it.

[TechyBen]

20 hours ago, comander said:

Companies are allowed to sell ownership in themselves so that they can raise funds. Ownership in a company is basically a stock. 

Why shouldn't a company be allowed to buy back the stock? I can recognize that treasuries can abuse insider information but there are some safeguards against that in the law already. 
 

Issuing new shares doesn't make a company more valuable in and of itself. 

Let's say you have a company, NewCo that's worth $10M and it has 100 shares issues in total. Each share is worth $100k. If you split the stock you'd now have 200 shares worth $50K each. Noone's ownership in the company changed. This is just accounting magic and in theory it shouldn't matter (though some people argue that cheaper stocks are easier to trade, which increases liquidity) in any meaningful sense. 

Another scenario - OldCo is worth $20M and has 100 shares. It decides to raise funds by issuing 10 new shares so that there's 110 shares in total. These shares are sold at $200k a piece. The company is now worth $22M (20M original value + 2M in cash from selling shares). No one's equity shares changed in value, though the % of the company owned is now lower. Over time these values will change as the company invests the capital it raised (e.g. investing in new tools or training or paying down debts). This might mess with supply/demand though and the share price might go down a little.

Another scenario - OtherCo is worth $5M (enterprise value + net debts/assets) and has 10 shares outstanding, each worth $500k. It buys back 1 share and retires it. OtherCo now is worth $4.5M and has 9 shares outstanding, each worth $500k. This is a share buy-back. 
In some cases the buy back will mess with supply/demand and the share price might go up a little. 

Some complications occur when the shares are sold at a significantly different price OR if the company is unable to sell all of them. This is beyond my knowledge. I've never worked on Wall Street and I ended up skipping the whole Harvard MBA thing when I got where I wanted without it. 

Yeah I said that. The company I worked for just issued shares to make it more "fluid" (though IMO it was a psychological expedition in tricking investors into buying more, which failed miserably and the company went down to a few pence per share when it had been more than a few pounds)

[TechyBen]

9 hours ago, LAwLz said:

I love how this forum jumps to conspiracy theories at the drop of a hat, especially when it involves something negative about Intel, Nvidia or AMD.

Someone releasing security issues about AMD products? It's a conspiracy to make AMD look bad! Probably Intel's doing!

Intel buying back some stock? It's a conspiracy to cover up losses, even though all the info about operational revenues and such are completely out in the open for anyone to see!

And so on and so forth...

To be fair, a lot of "fake" news on some third rate site is just blurm to drive serach results/investment panics similar to those random "investment" emails that use to go out. I forget the video, but those emails literally did cause spike/drops in stocks/shares that people profited off of (because there were enough marks/dumb people to follow it).

 

Noticing when there is a scam "I have some snake oil to cure all ills" and when there is some legitimate knowledge/benefit "I have a catalogue of the properties of snake oil/I have some snake flavoured cooking oil" is the hard part!