Analysis: Intel Inside - Looking inward for CEO may be best bet

Wed Nov 21, 2012 8:31pm EST
 
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By Noel Randewich

SAN FRANCISCO (Reuters) - Wanted: Visionary CEO to help world-class chipmaker expand beyond struggling personal computer market into tablets and smartphones. Experience with cutting-edge manufacturing plants and $10 billion annual capital expenditures a plus.

Intel Corp raised eyebrows on Wall Street and in Silicon Valley this week when it said it will consider an outsider to take over from outgoing Chief Executive Paul Otellini, potentially ending a four-decade tradition of internal succession. Some analysts took that as a sign the top global chipmaker might be considering a transformative hire.

Intel came under fire during Otellini's tenure for missing out on the mobile revolution, insisting that emerging markets would prop up growth while underestimating the scale of the eventual drop-off in personal computer demand, and orchestrating a push on "Ultrabook" laptops that have so far failed to excite consumers.

A future leader not steeped in Intel's insular culture could potentially open the chipmaker's prized factories for the first time to outside customers like Apple Inc or pursue other new strategies to expand into tablets and smartphones, said analyst Nathan Brookwood of Insight 64, a consulting firm.

But any investor hoping Intel will hire an outsider with a dramatic solution to the top chipmaker's PC plight may be out of luck, experts say.

While the idea of an iconic visionary like Steve Jobs stepping in to lift Intel into the mobile market - its Achilles heel - may sound attractive, it could open the chipmaker to new risks should it waver from its traditional focus on hard-core manufacturing.

Gurus with the experience to run a company with $53 billion a year in sales, a $10 billion capital spending budget and cutting-edge chip manufacturing plants are few and far between - and even rarer outside of Intel, which is struggling with falling PC sales and meager progress in mobile computing.

"If you bring someone in who hasn't run chip companies it's going to be very difficult because Intel is somewhat unique," said Patrick Henry, CEO of Entropic Communications, which makes chips for home entertainment. "It would probably surprise me if they didn't hire one of the internal guys."   Continued...

 
A woman walks past an Intel logo at the 2012 Computex in Taipei June 5, 2012. REUTERS/Yi-ting Chung