INTC: I sold when they did this
Intel has been a market leader for over 30 years. This is a good indicator for a company being high quality. This is also what led me and many others to invest in Intel when it experienced some challenges and competition from AMD and Apple.
In times of uncertainties, they way how company leaders behave can make or break their future. In 2023, they did something that broke my trust in leadership.
Revenue was already declining, and so were the profits.
Instead of focusing on innovation or production improvements, the management decided to instead play accounting tricks.
In 2023, Intel made a significant accounting change by extending the estimated useful life of some of its manufacturing equipment from five to eight years. This adjustment effectively reduced the company's depreciation expenses, resulting in a notable increase in reported profits. While this accounting maneuver doesn't generate additional cash flow, it does significantly impact Intel's income statement, making its earnings appear more favorable. The change was implemented, in part, to better reflect the longer useful lifespan of their equipment due to changes in their business model, as they pursue foundry services.
My ideal time to hold a stock is forever. But such a management action is a big red flag. I sold all my INTC holdings within a week.
In 2024, CEO Pat Gelsinger resigned. This stock is going nowhere. It is no longer a market leader in innovation and no longer a quality stock.