> It's a failure of the will to do the right thing for both the shareholders and the country.

They've been doing the exact right thing for the shareholders: squeezing the living shit out of an asset (x86/64) for decades while cutting anything interesting or competitive to the bone to give shareholders more money. Money spent on something that could really have been competitive is money not sent to the retirement fund that keeps John and Jane Q. Public swinging in more ways than one at their golf course retirement community in Florida.

The problem is, you can only do that for so long. There is a minimum spend to remain a competitive company with regard to being able to market products to consumers. Executives don't have a fiduciary duty to create the best possible product for consumers to look at and potentially buy in the marketplace, but they do have a fiduciary duty to shareholders to meet an earnings projection. If these two activities can coexist peacefully, great. If not, the first activity stops while the company gets gutted.

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benreesman 4 days ago | parent | next [-]

It's not actually good for the shareholders unless you have a divisor which is effort. Intel is a semiconductor company, investors that want to invest in treasuries or Exxon or whatever is considered extreme low-beta (ha, maybe not Exxon anymore, maybe Visa) have every opportunity to do so.

The most expensive, highest-margin, technically advanced and risky business in the world is for investors who want that in their portfolio. If they wanted to milk a dying industry on the way down they would go buy Disney stock.

It is very clearly in the interests of long-term investors in Intel to maintain a commanding position in fabrication: it's been the secret sauce of the company since the very beginning, it's never been more in demand.

This idea that companies are obligated to do what will deliver some little bump in the stock price in 90-180 days is everything from not how the rules work to just a lazy meme for people who don't want to earn their princely salaries.

Don't make excuses for weakness at the top.

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pishpash 4 days ago | parent [-]

Who are the marginal traders who determine prices though? Long-term holders don't trade. By the time they assert their view it's too late.

	▲	benreesman 4 days ago \| parent [-]
		Much more complicated than that though market price action dynamics do play a role in corrupt corporate governance at some remove. Different market participants will be trading on different signals, sentiments, or theses, and this will influence everything from the order types they use to the hold time of the instruments in question. But one of many things they all have in common is that they know that what other people think about the future affects the price right now: an intuitive proof of this is that if some major announcement is made about e.g. trade policy, and the market deems it credible, you will see instruments transact up or down in price immediately. In any effort to go deeper, one must be wary that this goes from market microstructure to Ito calculus to voodoo real fast, a closed form solution would be an infinite money machine! But a reasonable jumping off point might be the notion of a Keynsian Beauty contest: https://en.wikipedia.org/wiki/Keynesian_beauty_contest The TLDR is that hold times across like 13 orders of magnitude (rumor has it a cutting edge FPGA fielded by someone like Optiver or HRT or Virtu can pull a whole ladder in 20-50ns glass-to-glass, so whatever Buffet does divided by that) the market still in some sense reflects expectations about the future: it's "priced in" in trading parlance. "Too late" has some ways you can use it meaningfully in finance, but it's not in the sense I take you to mean above.

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extesy 4 days ago | parent | prev | next [-]

> They've been doing the exact right thing for the shareholders

Inflation-adjusted INTC [1] is the same as it was in 1997, including dividends! Shareholders have no real return from INTC for almost 3 decades.

[1] https://totalrealreturns.com/s/INTC

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joe_the_user 4 days ago | parent | prev | next [-]

I would quibble with the exact right thing phrases but otherwise agree. Intel indeed followed a formula which is intended to and often does produce massive return for some time frame. The formula is indeed "gutting the company" - squeeze every part of an enterprise and return the results as profits. Whether destroying the companies long term prospects is worth these short term profits is a complex calculation.

A managers' duty is to promote long term value and stability, actually, but return enough short term profits and you trump that long investment income.

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benreesman 4 days ago | parent [-]

There are orhanized ways to wind down a business unit or even a whole business and convert the salvagable assets into shareholder value, these range from corp dev / M&A activity all the way through bankrupcy and bondholder seniority.

And in the days when fraud or "fraud-adjacent" behavior carried serious costs? When violating the social contract around pensions and severance and stuff had real reputational costs that followed the principles around? People used them when necessary. You sold off the assets sometimes.

But beginning with the LBO "innovation" in the 80s and running a line through Milken and shit all the way to the Vanguard/State Street/Blackrock "quasi-sovereign" level of PE asset capture?

People started arbing it, not by seeing value where others had missed it! By betting that Gordon Gecko had enough fans to make the arb work. "Gutting" a company slowely and painfully is in a bucket I'll call "fraud adjacent": usually not outright illegal (lotta "gray" work, gray edge), clearly not what society wants or intended, and you know it's a scam when you look in the mirror every night. i used to get wasted with these guys at Catch when I lived in NYC: they'll tell you everytging I am and more on five gin and tonics

There's no place for the word "duty" in any version of that argument unless you also use the word "derelict".

Don't excuse weakness at the top.

	▲	joe_the_user 4 days ago \| parent [-]
		Don't think I'm using duty in any sense other than the sense than that the corporate raiders have set-up a situation where management feels forced to engage in the program of gutting they outline. All of this is part of the gutting of the US of course. By betting that Gordon Gecko had enough fans to make the arb work. "Gutting" a company slowely and painfully is in a bucket I'll call "fraud adjacent": usually not outright illegal (lotta "gray" work, gray edge), clearly not what society wants or intended Sure, but if society doesn't intend this, society has to f---ing do something. Clearly it's not. IE: if the only legal obligation of management is promoting maximum legally possible valuation over time, "squeezing" still makes sense if there's enough money to be had. The only way to change this is forcing the issue in some fashion or other.

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crusty 3 days ago | parent | prev | next [-]

>"They've been doing the exact right thing for the shareholders"

Clearly not as they've ended up suspending dividend payments altogether.

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consp 4 days ago | parent | prev | next [-]

The fiduciary duty is whatever the shareholders make of it, there is no need for it to be just monetary. If they were planning for long term instead of short term profits they would be making sure the company is still the world leader in 25 years. But since big investors are either pension funds or hedge funds (aka greedy bastards) you get earnings above all else.

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kortilla 4 days ago | parent | prev [-]

That’s a bullshit meme. One glance at the stock history shows that they haven’t been doing anything for shareholders for over a decade.

	▲	lenerdenator 4 days ago \| parent [-]
		That's because they're in a death spiral caused by gutting. At a certain point, you hollow yourself out, and you can't recover. Top-level talent doesn't want to work at a place that doesn't have a real shot. So things just... peter out.