Bernie Sanders' Intel tweet: Diving deeper

[BlueCheeseAgain]

Last edited Thu Aug 18, 2022, 05:36 PM - Edit history (1)

[Copying my reply to another thread.]

Background: Yesterday, Bernie Sanders (or rather his staff) tweeted this:

This is what a rigged economy looks like. On the same day a bill was signed into law to give a $76 billion blank check to micro-chip companies, Intel announced it will be cutting back on plans to increase jobs by $4 billion while increasing dividends for its wealthy shareholders.

Sanders is clearly saying that the CHIPS bill (on which he was the only Democratic no vote) was a mistake, because Intel is taking the money and giving it to shareholders, and cutting back on business to boot.

But there are a lot of things wrong with this tweet.

First, this happened on the day that the bill passed Congress, not the day the bill was signed. A minor point, but one that a U.S. Senator should get right.

Second, the tweet implies that Intel announced this because of the bill being passed. Much more likely, this was because this was the long-scheduled day of Intel's earning release, where they announced revenue fell 22% from the year before. Intel stock is down over 30% on the year. Other US chipmakers are also struggling, though not to the same extent.

Third, Sanders says Intel is pulling back on "jobs" by $4 billion. I'm not sure what that means. This article from that day says Intel is planning on cutting capital expenditures by $4 billion, due to a downturn in their business. Capex refers to buying assets like equipment, buildings, etc., not paying employees. It's misleading to say that this was money directly for jobs.

Fourth, as far as I can tell, Intel did NOT announce an increase in its dividend. What they did say as part of their disappointing earnings report is that they are committed to a "strong and growing dividend". Intel's dividend has been increasing slowly but steadily since 2013, so this wouldn't be new behavior in any case. (Disclosure: I edited this after being told that my original understanding of Intel's dividend was incorrect.)

So basically, Sanders is implying that Intel is taking taxpayer money and giving it to their shareholders. In fact, it sounds like Intel had a bad quarter and foresees a downturn, and is cutting back as a result, while trying to reassure investors that they shouldn't jump ship.

Sanders' tweet already has 50K+ likes, and probably a lot more views than that. People on this site have also seen it and it has likely fueled their cynicism about the Democratic Party more generally. There's a lot that needs to be fixed about the way our economy works, but we shouldn't need exaggeration and misleading claims to do it.

[Cuthbert Allgood]

1. In a conflict between progressive politicians and corporations,

I will ALWAYS side with the progressives. We don't need to bail out mega-corportations at the level that we usually do.

[BlueCheeseAgain]

2. I'm not asking you to side with one side or the other.

Bernie Sanders is free to think the CHIPS act was a bad idea, and that all the other Democratic senators and all the Democratic House members were wrong to support it. But he should use correct facts and implications to make his point.

[pnwmom]

7. Progressives don't all agree with Bernie on this. n/t

[BeyondGeography]

3. Intel is a great American company

Employing over 120k people and committed to re-shoring jobs from China to the US. I assume Bernie left that part out.

[questionseverything]

4. He didn't vote no, it passed with only our democratic coalition's votes

[BlueCheeseAgain]

10. You might be thinking of something else?

The CHIPS act was one of the bipartisan ones.


https://www.washingtonpost.com/politics/2022/07/27/senate-chips-funding-bill-pass/

[questionseverything]

15. So you are bashing him for a vote where his support wasn't needed

I assumed you were talking about the last victory for Biden and his coalition

Nm

[Hermit-The-Prog]

17. You assume bashing for a vote where none is evident.

[Turbineguy]

5. I think it's important not to leave people with any misconceptions

Leave that to the republicans, they need it.

[Celerity]

6. Intel raises dividend by 5% to $0.365 for 2022

https://seekingalpha.com/news/3792050-intel-raises-dividend-by-5-to-0365

My thoughts:

Remember, that was before they got showered with billions upon billions in 'corporate socialism' cash.

I am very sure they will raise it for 2023 as well, given the monster bribe they just extorted.

Remember, Intel and the other big US chip makers, long before the CHIPS Act, were given billions in subsidies, and turned around a closed 780 plants, laid off 150,000 US workers, did stock buybacks and exec pay massive increases, all whilst offshoring like crazy and producing the symbolic state the US chip industry is now in.

https://www.steelvalley.org/single-post/the-long-term-problem-of-outsourcing

[BlueCheeseAgain]

12. Thanks for the correction. I've updated the post.

Given that Intel has raised their dividend every year since 2013, you're likely right that they'll increase it for 2023.

[Celerity]

16. fair enough, cheers!

[KS Toronado]

8. DON'T BASH DEMOCRATS

He knew his single vote wasn't going to stop the bill, he's always been against handouts to big biz.

[Just A Box Of Rain]

14. Yes, don't bash Democrats.

All of whom voted for the CHIPS Act

[marked50]

9. I think that you have the dividend payout as a percentage of stock price is not correct

Intel pays a set price for dividend pays per share, not stock price. Typically these dividend payouts increase over time if the company remains profitable and grows, esp in share price. The way dividends are tied to stock price is that the stock price influences the percent return, not actually money distributed.

So if the stock price drops the actual amount for shareholders does not change, only their percent return on their investment and with a decrease in stock price and no change in announced dividends then the shareholder is actually getting a higher priced percentage return.

In Intel's dividend history they have never "lowered" their direct dividend payouts, only increased them or kept them flat.

[BlueCheeseAgain]

13. You are right.

Thank you for the correction.

[Emile]

11. Corporate socialism