Intel Replaces CEO Bob Swan With Veteran Pat Gelsinger; Shares Pop 7%


Intel announced that its CEO Bob Swan will be replaced by VMware CEO Pat Gelsinger next month, sending its shares up by 7% on Jan. 14.

Intel (INTC) said that the leadership change, which will be effective from Feb. 15, comes as the chipmaker is going through a “critical period of transformation.” Gelsinger, who started his career at Intel when he was 18 years old, has four decades of technology and leadership experience. Most recently, Gelsinger served as the CEO of VMware since 2012. Before that, he was president and chief operating officer of EMC Information Infrastructure Products at EMC.  

Omar Ishrak, independent chairman of the Intel board, said, “the board concluded that now is the right time to make this leadership change to draw on Pat’s technology and engineering expertise. The board is confident that Pat, together with the rest of the leadership team, will ensure strong execution of Intel’s strategy to build on its product leadership and take advantage of the significant opportunities ahead as it continues to transform from a CPU to a multi-architecture XPU company.”

Intel stated that the leadership change is “unrelated” to its 2020 financial performance. Additionally, the chipmaker disclosed that the company has made strong progress on its 7nm process technology and plans to announce an update when it reports its full fourth-quarter and full-year 2020 results on Jan. 21.

In a letter to Intel’s employees, Gelsinger, who said that he was coming “home”, announced that he will be sharing more in the near-term about his vision and strategy for Intel, which is aimed at boosting innovation, strengthening the company’s core business and creating value for shareholders, customers and employees.

Intel has been facing some fierce criticism recently. Activist hedge fund Third Point LLC last month reportedly urged the chipmaker to explore strategic avenues, including separating its chip design from its semiconductor production operations.

Specifically, Third Point head Daniel Loeb has asked Intel to take immediate action to boost its position as a major provider of processor chips for PCs and data centers. Loeb lamented that Intel has lost its position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing Co and South Korea’s Samsung Electronics Co Ltd.

Shares of California-based Intel, which is one of the few remaining companies in the world that both designs and manufactures its own chips, have dropped almost 4.4% over the past year. Meanwhile, the average analyst price target of $54.15 implies 4.9% downside potential in the next 12 months.

Mizuho analyst Vijay Rakesh reiterated a Buy rating on the stock with a $60 price target, as he is enthusiastic about the leadership change, which he believes is positive for INTC as it provides investors with some optimism for a potential push in the right direction.

“While CEO Bob Swan was a strong CFO and execution manager, a lack of technology background made it difficult for Intel to swim in the shark tank,” Rakesh wrote in a note to investors. “We believe Pat Gelsinger with his strong technology background, and experience could help focus INTC better at the Hyperscale/Enterprise OEMs and close the gap with AMD/NVDA.”

Overall, the rest of the Street is sidelined on the stock. The Hold analyst consensus breaks down into 15 Holds, 6 Sells and 5 Buys. (See Intel stock analysis on TipRanks).

Meanwhile, TipRanks’ Hedge Funds Trading Activity tool shows that confidence in Intel is currently Very Positive, with 27 hedge funds increasing their cumulative holdings in INTC shares by 3.6 million in the recent quarter.

Related News:
Qualcomm To Snap Up Chip Startup Nuvia For $1.4B
Telefonica Sells Telecommunication Towers to American Towers for $9.4B
Target Holiday Sales Pop 17% As Online Shopping Takes Over

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts