Intel Appoints New CEO After Targeted by Activist
Intel Corp. decided to replace CEO Bob Swan with industry veteran and VMware CEO Pat Gelsinger, less than a month after activist investor Third Point Partners urged the chipmaker to retain an adviser in investment to explore strategic alternatives.
Intel announced Wednesday that Gelsinger will take the helm from Swan on February 15. Gelsinger started his career at Intel and worked for the company for 30 years. Gelsinger will also join Intel’s board of directors assuming the role of CEO.
“Pat is a proven technology leader with an outstanding track record in innovation, talent development, and deep knowledge of Intel,” President Omar Ishrak said in a statement. “He will pursue a values-based cultural leadership approach with a particular focus on operational execution.”
The influence of an activist
News of Gelsinger’s appointment comes weeks after activist Third Point called on Intel to bolster its position as a major supplier of PC and data center processor chips after losing market share to his rivals. The shareholder noted that customers like Apple, Microsoft and Amazon are beginning to develop their own in-house silicon solutions and send those designs to be manufactured in East Asia. The activist suggested Intel separate its chip design from the manufacturing operations of its semiconductor fab.
Additionally, Third Point said Intel needs to get its “human capital management problem” under control, as many of the company’s talented chip designers and executives have left the company, while those remaining are “demoralized by the status quo”.
At the time, Intel said it “welcomes feedback from all investors on improving shareholder value,” adding that it looked forward to talking with Third Point about their ideas in this regard.
Third Point CEO Dan Loeb applauded the CEO change on Wednesday. “Swan is a class act and did the right thing for all the stakeholders who stepped down for Gelsinger,” he said. said on Twitter.
Performance
Intel’s announcement of its CEO transition comes ahead of its fourth-quarter earnings report, due next week. Intel said Wednesday it expects its fourth-quarter 2020 revenue and EPS to beat its earlier guidance provided in October. Intel also said it expects to post record sales for 2020, driven by demand for PCs and cloud computing during the pandemic.
Intel shares fell about 17% last year as the shares of many of its competitors, including Micron, Automated Micro Devices and NVIDIA, soared. Shares of Intel jumped 8% in morning trading on Wednesday, while shares of VMware fell nearly 7%.