Huge Intel Profits Even During the Recession!


In a bright sign for recession-battered Silicon Valley, Santa Clara chipmaker Intel has just handed out its biggest employee bonuses since the dot-com era, reflecting the company’s vastly improved finances.

The extra pay was provided in two larger-that-usual bonus categories, as well as in a third surprise “thank-you” bonus, which was the first time Intel had given that in several years, according to spokeswoman Gail Dundas.

She said the company’s generosity stemmed largely from a big resurgence of business at Intel, which last week reported it earned $2.3 billion in the fourth quarter of 2009. That’s an 875 percent increase from the same period a year ago and the company’s biggest quarterly profit since the fourth quarter of 2005.

Intel routinely offers two types of bonuses in January. In one of those, the company this time gave its employees 12.4 extra days of pay. Dundas said the last time that bonus was bigger was in 2000, when Intel paid its workers an extra 13.5 days salary.

Intel also routinely pays another type of bonus in January based on each employee’s job level and performance multiplied by a number that reflects how well the company did that year. This time, Dundas said the Intel multiplier was 3.92, the highest it has been since 2000. In other words, an employee whose job level and performance warranted a $1,000 bonus actually received $3,920 using the latest multiplier, verses $2,660 in 2008, when the multiplier was less.

On top of those two bonuses, “Intel U.S. employees each received a surprise $1,000 bonus in December as a thank you for the business results delivered for the company,” Dundas said. Intel employees in some other countries received $500, she added, noting that the last time Intel paid a thank-you bonus was in 2005.

Dundas was vague about the total amount of the bonuses the company paid its worldwide work force of 79,800, as well as the range of compensation it gave to various employees, saying Intel doesn’t normally disclose that information.

Aaron Boyd, research manager at Equilar, a Redwood City compensation consulting firm, said he is unaware of other Silicon Valley companies offering new or increased bonuses like Intel, which he noted “has really bounded back from where they were a year ago when things weren’t so rosy.”

But given that Intel, the world’s biggest chipmaker, is widely viewed as a barometer for the tech industry, he said, other companies eventually might follow its example if their businesses also improve.

Economic prospects do seem to be brightening for many local firms according to Carl Guardino, president and CEO of the Silicon Valley Leadership Group, who consults regularly with the area’s business executives.

Even in sluggish economic times when companies aren’t hiring, they often feel a need to pay bonuses to keep the top talent they have, Guardino said, adding that his organization also recently awarded most of its employees bonuses. “We wanted to send a message to our own team: ‘We believe in you,’” he said.