Hacker News Reader

Comment by sidewndr46 | Hacker News Reader

My understanding is that both Boeing and Intel have received significant subsidies and bailouts from the federal government when it became apparent the companies had issues. So I'd argue that this an indication of a management success, not a failure. They've been able to externalize some of their costs to the federal government, thus increasing their profits.

View on HN

It is a success, but merely a short term success. Boeing, Intel, GM, and GE went from being blue chips suitable as buy-and-hold for a retirement account to being simply high priced penny stocks.

On paper Intel is still a very solid company in a dominant market position (albeit that market is not necessarily a growing one). It still has great margins and 6-7x higher net income compared to AMD. And has arguably caught up with AMDs CPUs this year. Despite that it’s market cap is almost the same as AMD’s. So if you believe Intel can successfully reform itself (maybe not an easy sell, but not totally inconceivable they have all the tools they need for that) it’s a great stock which is criminally undervalued.

This is true. Valuation is key. If you could buy a barely-profitable shitty business for a dollar, it’d be a great deal. On the other hand, an amazing business like Apple is not worth buying if it costs you the Earth.

whoah, AMD has same marketcap as Intel ? They were worth 2B 4 years ago, now 180B... Feels like they're massively overvalued rather than Intel being undervalued

They came up with a mobile chipset that has a GPU that isn't completely useless. That's worth at least $100B. My Ryzen 5 4500U+Vega 6 was close to the bottom end of the new chipset when it was new, and it does everything I ask of it whether that's a spicy Ableton Live project or an hour of Tunic.

you may have missed the Xilinx merger

> And has arguably caught up with AMDs CPUs this year.

AMD is not the competitor they need to worry about.

The future will belong to manufacturers that can produce powerful CPUs that power a device for a day on a single charge, without needing fans for cooling (like what we see with the ARM-based M1 from Apple).

Low power/reduced heating costs will also be a big draw for cloud providers.

If Intel can't compete there they'll be in trouble.

Saying that Intel caught up to AMD is like saying Ford is saved because they won Le Mans. Come back to me when Intel can achieve M1 performance with the same power enveloppe.

M1 is not an x86 competitor, it's a laptop manufacturer competitor for the likes of Dell, Lenovo, ... I'll never buy a M1 CPU for my desktop because they wont sell me one to put in a rig I build.

Intel is undergoing a change in what shareholders it attracts as well.

It did catch up with AMD with Alder Lake, but it is also committed to very large R&D capital expenditures.

So anyone holding it hoping for higher dividends and more buybacks is dumping, which is pretty much everyone that bought it before Pat Gelsinger took over.

If they stay focused on the path they are on, they will turn it around. Anyone buying in now should be prepared to hold until 2025.

How did Intel catch up? Their CPUs might deliver similar performance but they are way less efficient than AMD and Apple if we can count them as a third player. The next few years will tell if Intel's foundries can catch up with TSMC.

Is Apple really a competitor so? Both AMD and Intel are selling to third parties and have access to the huge market of Windows powered machines. Apple is using the M1 exclusively in-house.

They used to be losing out on both performance and efficiency. Now they are up to par at least on one of those.

For foundry to be successful, they need one of the big clients - Apple, Qualcomm, Mediatek etc. If they find one of them, they'll pay for the fabs getting up to speed.

It's brilliant building up the gpu segment alongside. They are building internal demand, so they can be their own "trailbrazer" client for foundry.

In a world where TSLA's (P/E 177) market cap is 15 times that of GM (P/E 6), despite GM selling 6 times more cars, I'm not sure that I'd piss on GM as the 'overpriced penny stock'.

There are supply chains disruptions. Some car manufacturers have been heavily affected by them. Some have not. Unless you think that these supply chain disruptions will continue for the next 20 years, it's bit too early to declare the firms hit by them dead in the water.

It just demonstrates why nationalization should have been done instead. It was the right solution in 2008, too.

Exactly. Governments shouldn't bail out any corporation without a hefty share of ownership in exchange. We did it for Sallie Mae, and we can do it for Intel, Boeing, and the airlines.

no, we the people via our governmental apparatus should essentially force bankruptcy early enough (like the FDIC does for failing banks) and sell the assets in a widely-held auction (for fair price discovery), so that a competitor can keep customers from facing undue externalized risk, and creditors and employees can be made whole, while owners take a bath on their equity. the fundamental downside of taking risk has to exist for economies to keep moving towards efficiency (which our economy is frustratingly not because of said financializations and the like).

The thing is the downside of risk taking still exists. It just shifts from an individual risk(the corporation) to an existential risk(a big chunk of the economy).

The only way to prohibit this would be to cap the maximum size of a corporation. My guess is lawyers would just come up with some legal novelty to work around this in no time at all.

We need to enforce antitrust laws, or make new laws if those aren’t sufficient. Large companies have insane levels of control over our lives, and it’s not healthy for society. Just look at Facebook and Google’s stranglehold on information, or Apple’s 30% fees on most iOS app revenue.

"...It just shifts from an individual risk(the corporation) to an existential risk(a big chunk of the economy)."

but that's the point of the early-enough forced bankruptcy - to salvage value and re-internalize the downside risk to owners only.

i'm totally down with limiting corporate size, not via a direct statute to that effect, but via a high-functioning antitrust department along with severely progressive taxes. you can get as big as you want, as long as you can internalize all the downside risk of being 'too big to fail'.

I agree with this sentiment. And if you let companies fail, then you open the market for leaner, meaner companies to acquire their assets and build better products.

As it is, we keep some of these giant companies on life support for years or decades, allowing them to crowd out competition with their sheer size, while also failing to really produce good products that serve their customers.

This approach suffers from the same fundamental problem as the comparative advantage argument - that there is an infinite reservoir of companies that can immediately rehire the now laid-off talent at equal or better productivity

Real world doesn't work that way. Real world looks much more like the deindustrialized parts of the UK or the US, or the collapse of Soviet economy after switching to capitalism. Companies go bust, taking the whole supply chain with them, workers are laid off and disperse. After a few years, the skills atrophy and the experience vanishes - you cannot put humpty dumpty back together again. More often than not, the workers stay unemployed, underemployed, or just cheat disability. In high-end consolidated markets like semiconductors or aircraft manufacturing, we're not talking about an infinite reservoir, it's a handful of corporations per continent

bankruptcy saves more of those jobs than letting a company dissolve completely, because the company is allowed to shed debt (and equity) and reorganize. it’s also better than nationalizing, because it preserves the profit motive that is better at ensuring the company will stay/become competitive and survive in the long term without government support.

i’m totally good with throwing out the senior leadership and letting new leadership grow from within though. claw back their bonuses and golden parachutes too.

Why would the government take on actual work which they would promptly fail at and profits would soon go to zero ? They can just keep on collecting the sweet 21% corporate tax in addition to payroll taxes and income taxes on all the employees instead.

It was the right solution for banks in 2008, as most of them would have gone under without a bailout.

Take over, investigate, prosecute, replace corrupt management with people of integrity.

Basically, what the FDIC does with small banks that fail.

Also basically what Iceland did.

The US media furiously ignored it.

Reply on news.ycombinator.com