Intel CEO Paul Otellini, shown earlier this year, had been expected to lead the chip manufacturer for three more years.
Julie Jacobson, Associated Press
CEO surprises Intel's board by choosing to leave
- Article by: MICHAEL LIEDTKE
- Associated Press
- November 19, 2012 - 8:55 PM
SAN FRANCISCO - Intel CEO Paul Otellini is retiring in May, giving the world's largest maker of microprocessors six months to find a new leader as it confronts two major challenges: a shaky economy and a shift toward mobile devices that is reducing demand for its PC chips.
Although Otellini's impending departure was announced Monday, he notified Intel Corp.'s board of his retirement plan last Wednesday. The decision surprised Intel's board of directors, which had been expecting Otellini to remain CEO until the company's customary retirement age of 65. Otellini is 62.
"The decision was entirely Paul's," said Intel spokesman Paul Bergevin. "The board accepted his decision with regret."
Otellini will be ending a nearly 40-year career with Intel. He joined the Santa Clara, Calif., company after graduating from the University of California Berkeley and worked his way up the ranks before succeeding Craig Barrett as CEO in May 2005.
"It's time to move on and transfer Intel's helm to a new generation of leadership," Otellini said in a statement.
Intel Chairman Andy Bryant praised Otellini for leading the company through "challenging times and market transitions."
Intel's board plans to consider candidates inside and outside the company as it searches for Otellini's successor.
Otellini and the four other men who have been Intel's CEO during the company's 45-year history have all been promoted from within. The company's board is believed to be leaning in that direction again.
Intel identified the leading internal candidates Monday by anointing three of Otellini's current lieutenants as executive vice presidents. They are: Renee James, head of Intel's software business; Brian Krzanich, chief operating officer and head of worldwide manufacturing; and Stacy Smith, chief financial officer and director of corporate strategy.
If recent history is any indication, Krzanich has the inside track to become Intel's CEO. Both Barrett and Otellini served as chief operating officer before becoming CEO.
Although Otellini is generally well regarded, he has faced criticism for initially underestimating the impact that smartphones and tablet computers would have on the personal computer market. It was a pivotal change that also confounded Microsoft Corp. CEO Steve Ballmer, whose software company makes the Windows operating system that runs most of the PCs that rely on Intel's chips.
"The shift came more quickly than they expected, and when they did finally see what was happening, they were a little late to react," said technology analyst Patrick Moorhead of Moor Insights & Strategy.
Indeed, in 2008, nearly 300 million PCs were sold and most of them were powered by Microsoft's Windows and Intel's microchips, according to Forrester Research. About 142 million smartphones were sold that year, at a time when the tablet market hadn't taken off. That wouldn't happen until Apple's 2010 release of the iPad.
By contrast, this year, Forrester estimates that 330 million PCs will be sold worldwide compared with 665 million smartphones and just over 100 million tablets. By 2016, Forrester predicts annual sales of PCs will rise only slightly to 370 million machines while more than 1.6 billion smartphones and tablets will be purchased.
The fates of Intel and Microsoft have been so tightly wound for the past 30 years that computers using a combination of their chips and software are famously known as "Wintel" machines.
Apple's pioneering work in smartphones and tablet computers also muddled Intel's future. Both the iPhone and iPad inspired a wave of sophisticated handheld devices that are undercutting demand for desktop and laptop machines that house Intel processors.
Now, much of the technology industry is questioning whether Intel and Microsoft can catch up in the mobile market.
For whatever reasons, Otellini concluded it was time for new leadership at Intel -- an opinion that many investors share, according to RBC Capital Markets analyst Doug Freedman.
"A shift in leadership could be welcome news to investors as Intel could be in greater position to broaden its portfolio into higher-growth markets," Freedman wrote in a Monday research note.
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