Interesting....
https://www.reuters.com/article/us-intel-thirdpoint-exclusive/exclusive-hedge-fund-third-point-urges-intel-to-explore-deal-options-idUSKBN2931PS
27 replies (most recent on top)
I agree completely.
Elephant in the room. The biggest issue, Chief enabler of toxic managers and promoting/rewarding their friends and family is HR and HR Legal.
HR is Intel’s Lowest integrity, most corrupt function
- ODIs and their so called ODI investigators.
- warm line. I know if you submit a complaint to warmline, they send it to your manager. This is a service Intel HR promoted externally as one of their major efforts to support a diverse and inclusive environment. It couldn’t be further from the truth.
Elephant in the room - HR
Some of the guiding principles:
- Ones with good presentation skills is the most talented engineers, even if they have no engineering degree.
- Every employee is dispensable.
- Good compensation package is all that is needed to keep employees
- When bonuses are good, ‘bonus is part of your compensation package‘. And when bonuses are down, then it is ‘be thankful for the extra money you get’
- Outside consultants only can figure out what is wrong.
@2pzo+18E5odLO Altera was a failure from day one, the Xeon accelerator project was dead right from the start. It should be spun off immediately.
They want to divest of recent acquisitions, which ones are they talking about there? The 2 big ones have been Mobileye, Altera, are those candidates or only smaller ones?
BS didn't know enough about the industry or Intel to make drastic changes that were necessary to turn things around. I feel he did as much as he could(minor tweaks here and there) given his skillset. I place the blame entire on the board of directors for hiring BK in the first place, then not hiring someone better to replace him. If you go further back, the lack of a strong chairman of the board is really what caused the demise of Intel. Most tech companies that are successful today have an influential founder or former successful CEO as their chairman of the board. Omar Ishrak became the new chairman starting in 2020. I do think it makes sense for BS to stay on the board, but install a new CEO with a 3 year plan to reinvent the company. The tech landscape has changed and Intel is no longer the behemoth it once was. It can't afford to fight everyone in the industry(SW, HW, manufacturing).
I don't think this is the job Bob signed up for.....I think he just wanted easy mode role to coast for last few years until retirement, not to oversee fundamental makeover of major technology company (& industry)
@kae+18E5odLO The consequence of that split is obvious. It's like cutting off a rotting snake-bit leg to save yourself. The manufacturing org, unlike what became today's Global Foundries after AMD's split, will be unable to stand on its own outside of Intel's orders. Nobody but Intel would want to order wafers from them. It may collapse later, leading it to be bought by someone else just for the global capacity it commands, even if the process is far from best.
Meanwhile, Intel, now a fabless company, would continue to struggle because it doesn't command the same customer relationship it has with TSMC as TSMC does with the likes of Nvidia, AMD, and Qualcomm. Intel's wafers would be "down priority". It's unclear how much Samsung is willing and able to "help" in this regard. Intel, now dealing with capacity restraints on bleeding edge that's even more severe than AMD's, will gasp for air. It will not be a pretty picture in any way, shape, or form... Literally Intel will be a husk of its former self
If the hedge fund guy thinks losing JK is bad, how about losing the entire talented 10% of the entire Oregon CPU design organization.
I’m reading the letter now and encountering some great statements:
“ we cannot fathom how the boards who presided over Intel’s decline could have permitted management to fritter away the Company’s leading market position while simultaneously rewarding them handsomely with extravagant compensation packages; stakeholders will no longer tolerate such apparent abdications of duty.”
That letter is absolutely damning. We have been saying all those things for years and now somebody will have to very publicly answer for it.
It’s ok, diversity leadership will save everything
Dan is on point:
From a governance point of view, we cannot fathom how the boards who presided over Intel’s decline could have permitted management to fritter away the Company’s leading market position while simultaneously rewarding them handsomely with extravagant compensation packages; stakeholders will no longer tolerate such apparent abdications of duty. Of special concern is Intel’s human capital management problem and the absence of an articulated plan to address it. The Company has lost many of its most inspiring and talented chip designers and leaders, and our sources indicate that those who remain (several of whom are highly regarded in the industry) are becoming increasingly demoralized by the status quo. Intel was built on the vision of engineering genius and, without the best talent, the current trajectory will not be reversed. Solving Intel’s human capital management issue should be the Board’s most urgent task.
Here is full letter from Thirdpoint : https://www.valuewalk.com/loeb-third-point-letter-intel/?amp=1
For decades intel had process leadership which led to density and performance advantage over AMD.
Today 10nm is late, poor yielding and 7nm in even worse shape and majority of output coming from 14nm while AMD is on TSMC 7 more than one generation lead.
Intel has a big problem, they can’t fix 10 or 7 quickly or ever making their products their inferior to what AMD, Apple, Nvidia or even Google or Microsoft can do on foundry 5nm.
If they go to foundry they have to put up big bucks for wafer starts and lose some margin to the factory. Then they still need to decide on what to do with lagging performance on 10 and 7nm which will lose volume moved to Foundry making them less scale and return on the huge RD spend, really a big mess with no easy solution.
Big failures by current CEO and BOD as well as those on PSO and BKs watch. BS was wrong person in the wrong place and I’ll equipped to comprehend the problem let alone judge what various scenario risks are, nor ask the hard questions to flush the right path. A totally FUBAR
@1eac+18E5odLO intel mid/mid-upper management is just as toxic and poisonous as the executive management. shareholders can revolt and maybe force the board’s hand to replace the public figureheads but the stinking sewer right underneath will still be there.
To understand Intel’s problem, all they need to do is to look at all those employee surveys. Quarter after quarter, in all surveys across the company, the weakest areas are MANAGEMENT.
Don’t trust management
Don’t believe management is doing the right things
Etc etc.
Management is the issue across the company, in all groups, sub groups. What can you do? It is like you need a new blood transfusion. If the hedge fund pushes top leadership and board change, then maybe they can accomplish something.
https://realmoney.thestreet.com/investing/technology/intel-could-benefit-from-an-activist-but-theres-no-silver-bullet-available-15526713?puc=yahoo&cm_ven=YAHOO
@1irr+18E5odLO it would undoubtedly be the death of intel design. they were only competitive with a massive process advantage.
The buybacks no longer works so you will be seeing more of these news to make the stock go up. This fund manager is an activist fund manager meaning looking for short term gains. He probably wants to dump but need the stock to go up a little before he dumps it.
Yes, the hedge fund thinks Intel should separate the manufacturing business from the design business. Not sure whether this is even possible or desirable.
This just shows how out of touch Intel is with reality and for a fund manager to tell them how to run their business... how embarrassing for Intel.
Here is Intel's response. Very short (2 sentences). They "look forward to engaging with Third Point LLC on their ideas towards that goal".
Full 2 sentences here (lol): https://www.businesswire.com/news/home/20201229005382/en/Intel-Corporation-Statement-Regarding-Third-Point-LLC-Letter
I'm the OP and saw this on TV (CNBC financial news was discussing this move), so Googled for an article. What they said was the pop was due to investors thinking that this move will make changes at the company, making the stock go higher at some point down the road.
Intel needs to spend more time on screwing employees retirement plan, reduce EE benefits and focus on layoff like ACT and SET. The 7nm and 5nm problem will go away on its own.
What type of strategic change does the letter suggest? Splitting the company between "manufacturing" and "everything else"? If so, what would be the consequences of such move?
This message is damning:
‘ Intel’s most urgent task was addressing its “human capital management issue”, as many of its talented chip designers have fled, “demoralized by the status quo”.’
Is the full letter public? What is in the letter that made stock jump 6%?