Greed, Poor Management.. or Both?

by Joseph · 0 comments

in Business, Miscellaneous

If you try to keep up on business news like I do, then by now you have read about Intel and their third-quarter record sales. These record sales can be attributed to strong demand for laptop and notebook computers (on a side note, I do wonder how much of this can be attributed to the strong sales of Apple’s Macbook and Macbook Pro line of notebooks). The company reported third-quarter sales of $10.09 billion, which is 15% higher than their third-quarter sales in 2006. Their net income for the quarter was reported as $1.86 billion, which is 43% higher than their third-quarter of 2006 net income of $1.30 billion dollars. Their short-term debt is down from their second-quarter reports, their long-term debt is at about the same level and their cash and cash-equivalents (this means any short-term investments and cash – anything which can be accessed as cash within a years time) are up about $1.8 billion dollars.

It seems that all is well at Intel; profits are up, income is up, debt appears to be decreasing and costs are down when comparing the past three quarters to the same period in 2006. This is fantastic news for Intel when one considers the shocking revelation they received last year; they had their first revenue shortfall in 3 years and were losing market share to their considerably smaller competitor Advanced Micro Devices, otherwise known as AMD. Upon realization of their shortcomings they launched a major restructuring and dropped money-losing businesses, cut 10,000 jobs and pushed new products to the market. At first glance it seems that things are looking up for Intel, in fact one might even say they are going very well. However it seems that there is something they’re not telling us.

The Arizona Republic reported on October 17 that Intel sales hit a third-quarter record. In this same article they reported that Intel announced it would be cutting 2,000 jobs in the fourth quarter of 2007. It should be noted that this is on top of the 10,000 jobs that they have already cut. Nothing seems to add up with this announcement. Their profits are high, their expenses are down and their sales are up, and yet they announce new job cuts? Are they just being greedy and cutting jobs for the sake of further increasing profits and inflating their stock’s value? Is this due to poor management? Playing the devils advocate I’ll ask if maybe these jobs are being cut to make way for new jobs? Or is there something else that we don’t know, something that hasn’t been found on the books and that hasn’t been reported?

What do you think? I’d like to get an active discussion going on this topic if possible, so please leave your comments.

{ 4 comments… read them below or add one }

Grant October 20, 2007 at 7:14 pm

It might just be that with their restructuring and cutting of profit-losing endeavors that they don’t require the same amount of man power.

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Joseph McClellan October 20, 2007 at 7:35 pm

The thing is with that is their restructuring has already taken place, and as far as I could find while researching is that all employees planned to be cut off in the restructuring already have been.

So it seems that either I am missing some information, or they’re trying to increase their profits and thus their stock price, at the expense of their employees. Any other ideas?

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Michael McClellan October 20, 2007 at 11:00 pm

Joe, you’re right! Those dirty idiots! HA, just kidding. Well that is an interesting point. A lot of companies nowadays are cutting employees because an increase in techonology, or cheaper or more abundant resources can cause equal production with less labor, so yeah, they may be saving all that money on employees to purchase capital so they can increase future production, and possibly re-hire their needed staffing. I highly doubt the last part though we’ll see what plays out!

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Fred333 November 9, 2007 at 3:32 pm

That crazy world of business. I wonder how these companies stay open.

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