This website uses cookies to ensure you have the best experience. Learn more

Intel Case Study

3226 words - 13 pages

ESPEL Pierre
MATHIEU Jean-Charles

Investment analysis & Financing Decisions

Intel Corporation, 1992

A. Guembel

What factors in general do you think should determine a firm’s payout policy? Explain briefly for each factor how and why you think it should affect payout policy?

- Payout Policy

Net income has only two possible assignments: either reinvestment in the company in the form of cash flow or distribution to shareholders in the form of dividends or share repurchases. What are the factors that determine the dividend policy of a company?

- Basic principle : self-financing.

It is a financial principle that a company must ensure its development ...view middle of the document...

However, when dividends are taxed at a higher rate than capital gains rates, they believe it is better for the company to buy back its shares instead of distribute dividends. Regarding the share repurchase, the most frequently acquired shares are canceled, within 10% of the capital every 24 months . The redemption price shall first on the nominal value of shares redeemed, thus reducing the excess distributable reserves.
On markets in equilibrium, the distribution has no impact on the property of the shareholder, so it can not be good or bad distribution policies. We find the approach of Modigliani - Miller financial policy : there is no sustainable way to create value through a simple financial decision.

- Signalling theory and asymmetric information:

A signal model is a model in which the company uses dividends, investment or debt to reveal to the market its " health ." Each "signal" is associated with a cost, the cost of the signal which penalizes the company when transmitting false information to the market. The distribution is a means of communication between the company and investors.
Leaders are naturally motivated to give the best possible image of the company, they distinguish themselves from other through payout policies that bad companies can not imitate.
The distribution of dividends or share repurchases is one of these policies because a company which is going through difficulties, issues will not be able to do the same because of a lack of liquidity. Dividend policy or share repurchase is used by managers to convince that their image corresponds to the reality. Moreover, annual dividends are distributed generally 4-6 months after the end of the period so the dividend level depends on both the closed result and the next one. The level of distribution give an information on the forecast result of the year.
The dividend reduction may indicate a need of cash due to new investment opportunities, contrary to a dividend increase can be interpreted as a scarcity of investment opportunities. Communication strategy on the dividend policy is crucial, especially if this policy is changing .

- Agency theory :

According to the agency theory, creditors and managers have a common interest in defending the self-financing because the money stays in the company. The self-financing is a source of funding that requires getting little communication and the cost of information asymmetry is reduced. If leaders realize investments with low profitability, they are exposed to Public takeover bid or OPE. Forcing managers to pay dividends to shareholders, it is a way to discipline them and to emphasize the rule of the shareholder.
The dividend is an instrument used by the market to control managers. Dividend represent a part of the liquidity that the compagny could have invest. If managers want to invest they will resort to debt which puts pressure on them, and push them to be more effective.

- Market conditions :

Although a dividend...

Other Papers Like Intel Case Study

Intel Corp Essay

2530 words - 11 pages % microcontrollers, peripherals, and systems, and 52% microprocessors and coprocessors. Their profit trends are depicted in Figure 1 below. Figure 1: Intel’s Operating Profits 1987 – 1991. Harvard Business Review, Intel Case; Source: Analyst Estimates, Morgan Stanley III. Detailed Analysis Note: Financial data through this section is derived from the Harvard Case Study. Intel became public in 1971 and recorded first net profit. From

Intel Essay

410 words - 2 pages INVESTING IN DEVELOPMENT INTEL COSTA RICA Introduction S ince Intel’s decision to invest in Costa Rica in 1996, the case of the global electronics giant choosing the tiny country to locate its US$300 million semiconductor assembly and test (A&T) plant has been widely recounted in the field of investment promotion. A seemingly unlikely match, it is now known that Costa Rica identified a close fit with Intel through meticulous research, and


649 words - 3 pages Adolescence R.seate PSYC 285 Adolescence The developmental stages cognitive, social, physical, and personality can all be recognized in a T.V series, The Secret Life of the American Teenager. This series includes teenagers, life lessons, drama and confusion. The main characters are Amy, Ricky, Ben, Grace, and Adrian. Amy is a 14 year old virgin teenager and Ricky is 16, and he sleeps around with a lot of high girls. Throughout the series

Intel Corporation: The Dram Decision

1717 words - 7 pages Introduction Morison’s (2004) essay, “Gunfire at Sea: A Case Study in Innovation”, is a commentary on the social implications of technological change that surrounded the introduction of continuous-aim firing in both the British and American navies. Morison discusses (1) conditions that foster technological innovation, (2) reactions to the changes produced by innovation, and (3) the elements of an adaptive society. The Cogan and Burgelman

Intel Doc

1726 words - 7 pages too have been guilty of this. Just being proactive and going out Of your way to find something could yield results. Who knows, the intel that you don’t Wait for could lead to the capture of a terrorist. An example of this would be with the Attempted underwear bombing on Christmas. There was intel already collected on the Suspect and if it was all put together I’m sure that there would have been a case on the Guy

Intel Corporation

822 words - 4 pages 1. What was Intel´s strategy in DRAMs? Why did Intel decline in the DRAM market? De strategie van Intel in de DRAM markt was gericht op productleiderschap. Door voortdurend sneller dan de concurrentie grotere geheugencapaciteit (meer innovatie) op de markt te kunnen introduceren behaalde men, in eerste instantie, een competitief voordeel. Er waren meerdere redenen dat Intel dit competitieve voordeel niet kon vasthouden en haar marktaandeel

Intel Byod

544 words - 3 pages Case : Intel BYOD Assignment Questions 1. Does BYOD increase productivity in workplaces? 2. Should it be encouraged or discouraged? 3. How might other firms benefit from Intel’s approach to security (as shown in case Exhibit 2)? 4. How can Intel turn BYOD into a new source of competitive advantage? 5. What decisions can Intel make to ensure security of the corporate data on an employee-owned device that is used in the workplace? 6. How should

Chipping Away at Intel

1266 words - 6 pages Chipping Away at Intel Throughout his tenure as Intel’s fourth CEO, Barrett faced numerous organizational changes that were necessary for the company’s survival, but ultimately affected how stakeholders viewed his effectiveness. During the first three years of Barrett’s term as CEO, major changes were made to reorganize the company’s business units and corporate culture. There are several factors, both internal and external, that served as the

Inside Intel Inside

932 words - 4 pages Marketing Management Name: Yao-Jen, Tsai UID: 2021276543 Date: 9/29/2015 1. A description of what you believe to be the key marketing issue(s)/challenge(s) facing this organization, and justification in 2-3 sentences (5 points) Although Intel is still the leader of microprocessor in PC industry, nowadays the mainstream of electronic products has been transfer to portable electronic products from desktop

Chipping Away at Intel

541 words - 3 pages Chipping Away at Intel Strayer University 22 Apr 2012 Discuss the different changes at Intel over the first 3 years of CEO Barrett’s tenure. During his first three years as CEO of Intel, Barrett made several dramatic changes to the organization, to ensure that shareholders retained their capitol and he kept his position with the organization until retirement (Palmer, Dunford & Akin, 2009). One of the changes that Barrett made

Intel vs Dell

1179 words - 5 pages the Intel Corporation as the Chief Operation Officer from its inception as leading the IT world in the development of semiconductors and subsequently microprocessors (Sydell, L., 2012). Both of these pioneers have started and lead their respective communities into the future. Part of being a leader in the technology arena is to understand how one must fail but learn from such mistakes. Both of these men have clearly faced resistance, but did

Related Essays

Chipping Away At Intel Case Study

1105 words - 5 pages Chipping Away at Intel Case Study In today’s economy, corporations are consistently experiencing pressures to change. With pressures both internally and externally, leaders must constantly reassess who, what, when, where, why and how they do business. In light of these obstacles, they strive for the highest possibility of success by taking risks and pushing limits that others may question as extreme. We are going to review the “Chipping Away at

Intel Case Study

1898 words - 8 pages performance benefits, Intel processors are better for the environment. Intel changes socket platform less often than AMD, having been on LGA775 for ages. That means easier upgrades and less wastage, again better for the environment. The environment is hot right now, in case you hadn’t noticed. (In more ways than one, natch). AMD has fallen into the same trap that Intel did in the Pentium 4 days - marketing based on a number. In those days, AMD

Intel Case Study Hbr

1220 words - 5 pages The key marketing challenge Intel is facing today is generating awareness about the mosaic of technological possibilities using the microcontroller based computers. To tackle this issue without having to enter unexplored markets and face the risk of diluting the brand is another major challenge. Intel, with a share of nearly 80% of the Microprocessor market, could be termed the “ingredient” monopoly of the PC market but with products like Cell

Case Study Intel And Cisco

1899 words - 8 pages a viable one. Intel Question no 1: Discuss how Intel changed ingredient marketing history. Why did it do so well in those initial marketing campaigns? Answer: Intel created the quintessential ingredient- branding marketing campaign and made history. It chose a name for its latest microprocessor introduction that could be trademarked, Pentium and launched the “Intel Inside” campaign to build brand awareness of its whole family of