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posted by martyb on Sunday October 27 2019, @06:25PM   Printer-friendly

"Intel today announced its board of directors has approved a $20 billion increase in its stock repurchase program authorization. In the third quarter, the company generated approximately $10.7 billion in cash from operations, paid dividends of $1.4 billion, and used $4.5 billion to repurchase 92 million shares of stock".

https://www.intc.com/files/doc_financials/2019/Q3/Q3-2019-Earnings-Release.pdf


Original Submission

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Intel Not Focused on Defending High CPU Market Share 27 comments

Intel's CEO Bob Swan is looking beyond CPU market share:

"We think about having 30% share in a $230 billion [silicon] TAM[*] that we think is going to grow to $300 billion [silicon] TAM over the next 4 years, and frankly, I'm trying to destroy the thinking about having 90% share inside our company because, I think it limits our thinking, I think we miss technology transitions. we miss opportunities because we're, in some ways pre-occupied with protecting 90, instead of seeing a much bigger market with much more innovation going on, both Inside our four walls, and outside our four walls, so we come to work in the morning with a 30% share, with every expectation over the next several years, that we will play a larger and larger role in our customers success, and that doesn't just [mean] CPUs.

It means GPUs, it means Al, it does mean FPGAs, it means bringing these -technologies together so we're solving customers' problems. So, we're looking at a company with roughly 30% share in a $288 billion silicon TAM, not CPU TAM but silicon TAM. We look at the investments we've been making over the last several years in these kind of key technology inflections: 5G At autonomous, acquisitions, including Altera, that we think is more and more relevant both in the cloud but also ai the network and at the edge, and we see a much bigger opportunity, and our expectations are that we're going to gain our fair share at that much larger TAM by Investing in these key technology inflections." - Intel CEO Bob Swan

A 30% TAM in all of silicon would mean that Intel not only has more room to grow but is a lot more diversified as well. With the company working on the Nervana processor as well as its Xe GPU efforts, it seems poised to start clawing market share in new markets. Interestingly, it also means that Intel is not interested in defending its older title of being the CPU champion and will actually cede space to AMD where required. To me, this move is reminiscent of Lisa Su's decision to cede space in the GPU side of things to turn AMD around.

Intel's business strategy is now focused on whatever an "XPU" is as well as GPUs, FPGAs, machine learning accelerators, and next-generation memory/storage:

This means the company intends to continue making its heaviest bets in areas such as Optane storage, hardware Artificial Intelligence acceleration, 5G modems, data center networking, and more. The slide that really drives this commitment home comes from Q2's investor meeting that explicitly shows the company moving from a "protect and defend" strategy to a growth strategy. If this slide were in a sales meeting, it wouldn't say much—but delivered to the company's investors, it gains a bit of gravitas.

Most of this was revealed nearly six months ago at the company's May 2019 investor's meeting, but the Q3 investor's meeting last week continues with and strengthens this story for Intel's future growth, with slides more focused on Optane, network, and IoT/Edge market growth than with the traditional PC and server market.

[*] TAM = Total Addressable Market.

Related: Intel Promises "10nm" Chips by the End of 2019, and More
Intel's Interim CEO Robert Swan Becomes Full-Time CEO
AMD Gains Market Share in Desktops, Laptops, and Servers as of Q4 2018
PC Market Decline Blamed on Intel, AMD to See Gains
Intel Chip Shortages - at Least Another Quarter or Two to Go, Say PC Execs
Intel announces $20 billion increase in stock buybacks (from $4.5 billion)
Intel Xe High Performance Computing GPUs will use Chiplets


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  • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @07:10PM (3 children)

    by Anonymous Coward on Sunday October 27 2019, @07:10PM (#912499)

    Fuckers!

    • (Score: 1) by RandomFactor on Sunday October 27 2019, @07:24PM (2 children)

      by RandomFactor (3682) Subscriber Badge on Sunday October 27 2019, @07:24PM (#912503) Journal

      I've never had a lot of sympathy for short sellers.

      --
      В «Правде» нет известий, в «Известиях» нет правды
      • (Score: 0) by Anonymous Coward on Monday October 28 2019, @12:26PM (1 child)

        by Anonymous Coward on Monday October 28 2019, @12:26PM (#912751)

        I prefer to trade inverse ETFs myself but only intraday. I tend to do much better buying the inverse (an indirect way of shorting) than going long intraday but I do better going long on the non-decaying ETFs interday.

        While I also have a job it's an ordinary job that requires no education. I am highly educated though. I've taken lots of difficult math and chem classes, bio classes, economics classes, etc... community college and university classes. I guess I should find a more productive way of making money but haven't really been able to. Oh well ....

        • (Score: 1) by RandomFactor on Monday October 28 2019, @09:36PM

          by RandomFactor (3682) Subscriber Badge on Monday October 28 2019, @09:36PM (#912972) Journal

          Reading between the lines - you may not have finished?

          If so, and you aren't going to branch out a la Bill Gates, at least keep going and wrangle it into a degree. PITA at night of course, but college isn't just about brains, part of it is just telling an employer that you can finish something. It's also a brutally simple check box for HR to sort through the stack when applying for anything, so why give the clowns you are up against an easy win?

          --
          В «Правде» нет известий, в «Известиях» нет правды
  • (Score: 5, Informative) by jimbrooking on Sunday October 27 2019, @07:29PM (2 children)

    by jimbrooking (3465) Subscriber Badge on Sunday October 27 2019, @07:29PM (#912505)

    ...that middle-class tax cut of a couple of years ago, right?

    • (Score: 1, Insightful) by Anonymous Coward on Sunday October 27 2019, @08:10PM (1 child)

      by Anonymous Coward on Sunday October 27 2019, @08:10PM (#912514)

      It does stand to help the middle class because Intel is widely held.
      It is not sustainable though, and could have helped drive security and innovation, had the market not demanded the payout of the surplus.

  • (Score: 3, Insightful) by Anonymous Coward on Sunday October 27 2019, @07:51PM (2 children)

    by Anonymous Coward on Sunday October 27 2019, @07:51PM (#912508)

    $20 billion not invested in the companies future products. e.g. not spent on r&d to fix all their bugs.

    • (Score: 2) by RamiK on Sunday October 27 2019, @08:42PM

      by RamiK (1813) on Sunday October 27 2019, @08:42PM (#912521)

      ...the company's future...

      Ah! An optimist! Go away! Shoe! Shoe!

      --
      compiling...
    • (Score: 3, Insightful) by deimtee on Monday October 28 2019, @03:34AM

      by deimtee (3272) on Monday October 28 2019, @03:34AM (#912631) Journal

      Not invested in Intel's future products true, but it also means that the previous owners of that stock will have $20B to invest wherever they like. Money just moves around, it is not destroyed by this sort of thing.

      --
      If you cough while drinking cheap red wine it really cleans out your sinuses.
  • (Score: 5, Insightful) by Snotnose on Sunday October 27 2019, @08:06PM (11 children)

    by Snotnose (1623) on Sunday October 27 2019, @08:06PM (#912513)

    Why not hand it out as dividends? Why not invest in R&D?

    The only reason I can think of is it gooses the stock price, which means the Cxx folks get bigger bonuses. It sure doesn't help the company as a whole, nor the average shareholder.

    --
    Why shouldn't we judge a book by it's cover? It's got the author, title, and a summary of what the book's about.
    • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @08:16PM

      by Anonymous Coward on Sunday October 27 2019, @08:16PM (#912516)

      If I am a standard, shortsighted investor of today, I want to be paid out any loose funds so that I can decide to invest in a company that will have the next big product. Not leave it with intel, who may just spend it on hookers and blow.

    • (Score: 4, Informative) by RandomFactor on Sunday October 27 2019, @08:17PM (6 children)

      by RandomFactor (3682) Subscriber Badge on Sunday October 27 2019, @08:17PM (#912517) Journal

      There are reasons for stock buybacks that can and do benefit shareholders in the short or long term.
       
      Most obviously it props up stock prices. That is obviously good for people with stock in the short term.
      It also reduces the company's float potentially reducing cost of capital, which can save a significant ongoing amount in a company of Intel's size.
      If the company thinks the stock is valued too low or that they are coming out with something that will dramatically increase its value it can be a good investment in and of itself.
       
      It can consolidate ownership which can streamline things by reducing the number of voices a company answers to.
       
      *cough* Also it, uh, may prop up certain financial metrics that are calculated into C* bonuses....

      --
      В «Правде» нет известий, в «Известиях» нет правды
      • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @09:03PM (4 children)

        by Anonymous Coward on Sunday October 27 2019, @09:03PM (#912523)

        Also you are taxed on dividends in the period you receive them at a non-long term capital gain rate. When a company buys back shares the stock price benefits don't get taxed until you sell them and you can benefit from the lower long term capital gain tax if you hold over a year and you can strategically sell the shares when your tax rate is lower due to lower income.

        • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @09:13PM

          by Anonymous Coward on Sunday October 27 2019, @09:13PM (#912525)

          So... gov meddling strikes again.

        • (Score: 0) by Anonymous Coward on Monday October 28 2019, @04:24AM (2 children)

          by Anonymous Coward on Monday October 28 2019, @04:24AM (#912643)

          Also you are taxed on dividends in the period you receive them at a non-long term capital gain rate

          If you have held the underlying for a few months, your dividends are "qualified", which means you pay long term capital gains rates on them. That government meddling has sweetened dividends by a whole lot since Baby Bush's government implemented that.

          What about the corporate tax normally payable on dividend payouts. Is buying back your own stock considered an expense?

          • (Score: 0) by Anonymous Coward on Monday October 28 2019, @12:35PM (1 child)

            by Anonymous Coward on Monday October 28 2019, @12:35PM (#912755)

            Thanks for that. I will talk to my accountant about this.

            • (Score: 0) by Anonymous Coward on Monday October 28 2019, @03:45PM

              by Anonymous Coward on Monday October 28 2019, @03:45PM (#912849)

              Update: I guess he already knows and has been taxing me accordingly. Just that when I spoke to him last he so over simplified that what he told me was essentially incorrect. Then today he says, well, the rules are more complicated than that, blah blah blah, but yes, you have been taxed correctly. I guess he's so busy he doesn't have time to correctly explain anything to me ....

      • (Score: 1, Interesting) by Anonymous Coward on Sunday October 27 2019, @09:25PM

        by Anonymous Coward on Sunday October 27 2019, @09:25PM (#912526)

        Lets say intc stays at 56 dollars a share

        20,000,000,000/56 ~= 357142857 shares

        Lets say their dividend stays at 1.26 That is 357142857*1.26 per year they 'keep' or about 449,999,999.82 lets call it 450 million :) so 20 billion div 450 milllion, or about 44 years to ROI on that. Or about 10-15 percent of their current dividend payout. As this has been increasing fairly rapidly over the past 10 years. They either increased their dividend a decent amount already or issued a bunch of debt disguised as shares recently. That they are not using it to wipe out their 29B in debt tells me that their debt must be very low to free to service (its not ~2.5 billion last year).

        Usually this is a stock prop up. Looks like it here too.

    • (Score: 2) by JoeMerchant on Monday October 28 2019, @01:04AM (1 child)

      by JoeMerchant (3937) on Monday October 28 2019, @01:04AM (#912585)

      the Cxx folks get bigger bonuses

      And, who makes the decisions? And, what are their motivations?

      When we can start structuring compensation and incentivization that works for positive outcomes in the far future, and get those types of compensation used broadscale, that will be a turning point in civilization that might just get us off the boom/bust cycles of the past 5000 years.

      --
      🌻🌻 [google.com]
      • (Score: 0) by Anonymous Coward on Monday October 28 2019, @03:01AM

        by Anonymous Coward on Monday October 28 2019, @03:01AM (#912627)

        the boom/bust cycles of the past 5000 years.

        This didn't exist until central banking was invented. The first bubble was the tulip craze in the Netherlands almost immediately after the first central bank was formed. https://en.wikipedia.org/wiki/Amsterdamsche_Wisselbank [wikipedia.org]

    • (Score: 0) by Anonymous Coward on Monday October 28 2019, @03:40PM

      by Anonymous Coward on Monday October 28 2019, @03:40PM (#912844)

      INTC has been slumping for a year an a half since the Specter/Meltdown bugs came out. Made a killing on AMD by buying it in February last year, but it leveled off a while back and I sold most of it before the December mini-crash last year during the trade war saber rattling.

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