Intel just announced their regular dividend of 10 cents a share payable Dec 1, 2006:
http://biz.yahoo.com/bw/060913/20060913005428.html?.v=1
With almost 5.8 billion shares outstanding that's around 580 million $. Now why would the board announce a regular dividend of this size if they were expecting to get hit in the gut on profits in 2H? Why not conserve cash if they are bleeding. To me, this is an indicator that things may not be as bad as we financially suspect. 800 million $ is still a lot of money and the way I read this, Andy Bryant is not expecting a loss - GAAP or otherwise in 2H. Otherwise it is unlikely he would hand 600 million $ back to shareholders if the company was heading to red.
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9 comments:
Red? The only one I know of who is talking about Intel's being in financial trouble is Sharikou.
Intel is not going into the red; Intel is shrinking. These are two different things. Intel is in no danger of losing money however they are making less money than they did last year. In other words, Intel has negative growth while AMD has positive growth.
A better indicator than the dividend is how much Intel spends on stock buyback and how much cash and inventory they have at the end of the year.
Intel is desperately trying to hold the stock price. If it cancels dividend, the stock will fall below $15 instantly.
Anyway, expect losses for Intel's 3Q06.
Intel has been a little too sure of themselves in the past. I guess we'll have to wait until the end of 2H to find out...maybe with all those spies sharikou says they have at AMD, AMD's 65nm might not bring a giant improvment we're hoping for. (even if you're not an AMD fanboy you should hope its better)
Scientia - completely agree with your assessment. Intel is indeed shrinking revenue. It seems the focus has moved from growth at any cost to chasing profitability.
Sharikou - I also agree with your comment on them trying to hold the stock price. Though I don't think they are heading to a Q3 loss but we'll know in 30 days.
If it cancels dividend, the stock will fall below $15 instantly.
Hey genius, based on what valuation model do you make your prediction that elimination of a 2% (0.5%/quarter) dividend would result in a 25% drop in valuation of a business. Once again, thanks for the empty rhetoric instead of a logical, well reasoned point.
Hey genius, based on what valuation model do you make your prediction that elimination of a 2% (0.5%/quarter) dividend would result in a 25% drop in valuation of a business. Once again, thanks for the empty rhetoric instead of a logical, well reasoned point.
Canceling dividend is like a re-announcement of a bad quarter.
Canceling dividend is like a re-announcement of a bad quarter.
Translation: I can't back up my statement, I don't know what I'm talking about, and will repeat myself until someone believes me.
I'll repeat myself: what valuation model would show that elimination of a 2% dividend would support a 25% drop in market cap.
Hint: Initial market reaction could be very negative, but an efficient market would quickly move to a valuation which would reflect the true impact of a 2% reduction in expected return on capital. It won't be a 25% drop, twit.
Actually, cancelling or reducing the dividen is announcing intel is in trouble, not that it needs a little cash (yea I know, 1/2 billion.
the fact that intel is throwing away these properties like you sell property in Monopoly to pay for boardwalk already speaks to they are in a hurry to cut costs at a mimimum (and use the cash to pay the dividend)
the fact that intel is throwing away these properties like you sell property in Monopoly to pay for boardwalk already speaks to they are in a hurry to cut costs at a mimimum (and use the cash to pay the dividend)
Cancelling/cutting a dividend is never, ever a good sign. But remember- a dividend is a return of capital to shareholders because the company feels it can not generate an acceptable return to the shareholders on the cash disbursed (e.g the Microsoft special dividend a few years back).
That said, I think it is silly to imply that shedding crummy businesses that should never have been acquired is being done just to pay the dividend is silly at best. Those businesses are a substantial drag on earnings, and any writedown of goodwill beyond the current levels doesn't consume cash, so there is no reason to keep throwing good money after bad on them. Get rid of them, improve management focus on the businesses that either make money or have real potential to make money, and move on. Dividends are a second or third order variable in that equation...
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