End Of An Era: Intel Chief Executive Paul Otellini to Retire in May

by Gaurav Kheterpal on November 20, 2012

Once upon a time, Intel was the undisputed king of the chip manufacturing industry and the company’s CEO Paul Otellini, popularly known as ‘the chip guy’ and ‘the conductor’, was one of the most well respected names in the technology arena. However, things changed with time, as competitors such as ARM and Qualcomm began to threaten Intel’s dominance.

The company made a big strategical error when it virtually ignored the smartphone and tablet segment to focus on what it does best – build chipsets for computers. This eventually meant that Intel is still playing catch up in the mobile segment and with all due respect, all its efforts in the smartphone segment have produced ordinary results.

Last month, Intel reported  net income drop 14 percent from the same quarter last year, landing at a net income of $2.97 billion or 58 cents per share. Intel earned 60 cents per share, excluding amortization of certain acquisition-related assets and related tax effects. It was evident that customers are shifting their attentions away from PCs and to mobile computing options, exemplified by Intel’s loss of about eight percent of revenue in their PC department.

However, none of this suggested that Otellini would retire all of a sudden. After all, he’s been a loyal Intel employee for over 40 years. Nonetheless, his detractors feel his departure is an opportunity for Intel to take another shot at the mobile segment.

Otellini became CEO in the second quarter of 2005. Intel plans to consider both internal and external candidates for the CEO position and it expected the “leadership transition” to last six months. The company has promoted three executives to executive vice presidents – Renee James, who is in charge of Intel software; Brian Krzanich, who is chief operating officer and oversees manufacturing; and Stacy Smith, the chief financial officer and director of corporate strategy. If Intel were to find a new CEO internally, it might well come down to a choice between these three names.

Despite all the criticism about Intel’s performance in the mobile segment, under Mr Otellini’s eight years at Intel’s helm, annual revenue rose from $39 billion to $54 billion and earnings-per-share grew from $1.40 to $2.39. Otellini played a key role in establishing the Wintel alliance which helped Intel capture the volume game thanks to Microsoft’s deep user penetration in the consumer segment.

Speculations suggest that Intel may well be looking for new blood as Otellini announced his retirement without a successor lined up, and that Intel said it will also look outside as well. The general belief, though, remains that Intel needs someone who can shake things up and look at the company with a new, unbiased eye, someone who does not have a long tenure with the company. In past successions, Intel has promoted the current COO to the top job.

While the name of Intel’s new top boss remains unclear as of now, it’s time for the company to bid adieu to one of its most loyal and committed employees –  CEO Paul Otellini.

Did you like this post? TheTelecomBlog.com publishes daily news, editorial, thoughts, and controversial opinion – you can subscribe by: RSS (click here), or email (click here).

Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

Comments on this entry are closed.

Previous post:

Next post: