Intel CEO Patrick Gelsinger takes pay cut amid cost reduction plans

Yahoo Finance’s Daniel Howley joins the Live show to discuss reports that Intel CEO Patrick Gelsinger has taken a pay cut as the company aims to cut costs.

Video transcript

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JULIE HYMAN: Let's turn to another tech giant. That is Intel. CEO Pat Gelsinger and other managers are facing a pay cut as the company looks to cut costs. This comes days after the chip-maker posted quarterly earnings that disappointed investors. Yahoo Finance's Dan Howley swapping into the chair right now.

DANIEL HOWLEY: In and out, baby.

JULIE HYMAN: And, Dan--

DANIEL HOWLEY: In and out.

JULIE HYMAN: You know, it's interesting. It makes sense, right, given how lousy those numbers looked.

DANIEL HOWLEY: Yeah. This is just, kind of, a seeming movement in the tech space, where we've seen tech CEOs get a little haircut on their salaries. Gelsinger getting a 25% cut. We saw Tim Cook get a cut. We saw Sundar Pichai get a cut. Gelsinger's, though, is to his actual salary, not his stock compensation. So he's still going to get a ton of money out of this.

You know, high-level executives, according to the report, are getting a 15% cut, and midlevel employees are looking at a 5% cut. Intel, obviously, swung for a net loss of $644 million in Q4. They also guided for an adjusted loss of $0.15 per share in Q1. So that's not looking good. Analysts were expecting a profit of $0.25 per share.

This is, kind of, just the continuation of the story that we've heard of tech companies, kind of, dealing with the backlash from the overexpansion they did. And then, now, the fact that people just don't necessarily need computers right now. Companies aren't necessarily going out and buying servers, at least on Intel's side of things. AMD is a totally different story.

Their data center business did great. They beat on the top and bottom line. The main problem for them is still that client computing, the folks who don't need to buy computers right now. Gamers are also cutting back on spending. So AMD is guiding for a year-over-year revenue decline of 10% for the current quarter. So we'll have to see how that bears out.

But it doesn't appear to me that this kind of storyline is going to be stopping, at least in the next quarter.

BRAD SMITH: Yeah. And for Intel versus AMD-- and we were having some of that debate earlier in the show-- I guess, in terms of the investments that both of them are making, it seems like for investors, still, the-- as Julie was mentioning-- the, kind of-- if you pair them against each other, the advantage might go AMD's direction right now.

DANIEL HOWLEY: At this point, as far as investing goes, yeah, it seems that way, right? They're doing better there. Their earnings reports are more positive. You know, I think what you have to look at, as far as the overall company health between the two, is that Intel is a bigger company. They do more, right?

So AMD, they design their chips. They don't make their chips. Intel's making chips. They're building foundries. They're getting clients to have them produce chips for them, right? So this is a company that's more than what AMD has to offer, at least as far as the size and scale goes.

And they're jumping into the independent graphics market, the gaming graphics market. They're not really there yet when it comes to beating out AMD or Nvidia, though.

BRIAN SOZZI: Dan, the next cut might be here to the dividend. Now, I put that question to Pat Gelsinger last week after the reported earnings. I think a little bit of the language shift. He said they want to maintain a competitive dividend. That wasn't a ringing endorsement for paying out what they are paying out currently.

DANIEL HOWLEY: Right, yeah. And I think, you know, when you're looking at these kinds of companies and you're looking at how much they're going to have on their dividends here, it really does come down to, I think, how much they're willing to part with, just as far as the company's health goes. Again, this is a massive firm. But they have not been doing well for a little bit, right?

Their finances were fine during the pandemic when everybody was out there buying computers. But when you looked at the back side of things, obviously, we have these issues here, but we also have issues with the fact that their technology just hasn't kept up. That has investors also questioning, you know, OK, so you're putting $20 billion into a plant in Ohio, what does that mean as far as you being able to tackle something like TSMC and prove that you have the ability to build out like they do or beat AMD when it comes to the chips that you're offering? Because right now, you're not. So when will you do that?

And I think, you know, these are the kind of questions that Gelsinger has to answer. He's taking this 25% cut to, kind of, say, yeah, we haven't delivered, but you're still getting those stock options, so that's pretty-- that's pretty good.

JULIE HYMAN: Yes.

DANIEL HOWLEY: [LAUGHS]

JULIE HYMAN: May not have the base, but still has the option. So we'll see what that looks like going forward. Thanks so much, Dan. Appreciate it.