Intel Ousts Chief Executive Bob Swan -- 2nd Update
January 13 2021 - 11:02AM
Dow Jones News
By Asa Fitch
Intel Corp. ousted Chief Executive Bob Swan in a surprise move
after activist hedge fund Third Point LLC urged sweeping changes at
the company to revive the U.S. semiconductor giant's fortunes.
Intel on Wednesday said Mr. Swan would be replaced by VMware
Inc. CEO Pat Gelsinger effective Feb. 15. Mr. Gelsinger rejoins
Intel where he was once the technology chief after serving as CEO
of the business-software provider since 2012.
Mr. Swan joined Intel in 2016 as chief financial officer. He was
named interim CEO two years later and formally given the top job in
January 2019. CNBC earlier reported Intel was replacing Mr.
Swan.
Third Point Chief Executive Daniel Loeb in a December letter to
Intel Chairman Omar Ishrak said the company's woes could threaten
the U.S. tech industry and urged the chip maker to consider
alternatives, including selling some of its acquisitions and
splitting its design and manufacturing operations -- a move that
would end Intel's long-held status as America's leading integrated
semiconductor maker.
"After careful consideration, the Board concluded that now is
the right time to make this leadership change to draw on Pat's
technology and engineering expertise during this critical period of
transformation at Intel," Mr. Ishrak said in a statement.
Intel shares rose more than 8% in morning trading.
Intel disclosed the CEO change just before the window closed for
nominations to its board, potentially heading off a public fight
with Third Point. Intel said its leadership change wasn't driven by
Third Point.
Mr. Loeb welcomed the move. "Swan is a class act and did the
right thing for all stake holders stepping aside for Gelsinger," he
said on Twitter.
Third Point's action came at the end of a year that saw Intel
lose its status as America's highest-valued chip company and the
chip maker suffered more product delays. Intel also faces growing
competitive pressure from rivals such as Nvidia Corp., which has
surpassed Intel in market capitalization, lost market share to
former distant rival Advanced Micro Devices Inc., and was dumped by
Apple Inc. as the supplier for its Mac computer processors.
Intel has fallen behind Taiwan Semiconductor Manufacturing Co.
and South Korea's Samsung Electronics Co. in the race to make the
most cutting-edge chips. TSMC makes chips under contract for some
Intel competitors, including Nvidia and AMD.
Intel last year said it would consider outsourcing the
manufacturing of some of its most advanced chips. The company
signaled it would provide an update on its plans next week when it
posts results.
Despite the setbacks, Intel has said it expects to post record
sales for 2020, boosted by pandemic-era demand for PCs and cloud
computing. Intel shares retreated around 17% last year when the
stock in many of its rivals soared. Shares were up 8% in early
trading Wednesday.
Third Point has said it has roughly $1 billion stake in Intel.
In its letter, Mr. Loeb said Intel had made acquisitions that
failed and that the company's board had allowed management to
"fritter away" advantages. "Stakeholders will no longer tolerate
such apparent abdications of duty, " he wrote. He also expressed
concern Intel was losing chip design talent.
The U.S. has become increasingly concerned about losing its edge
in a technology Cold War playing out against China and the erosion
of U.S. chip-making in particular. American lawmakers last year
moved to help finance domestic chip-making capacity.
Intel also said when it posts fourth-quarter earnings next week
that sales and per-share earnings would top the guidance issued in
October. Intel is on track for a record year in revenue. It also
said it has made progress in developing its newest generation of
chips where it had struggled.
Mr. Gelsinger led VMware, which became part of Dell Technologies
Inc. in 2016 with Dell's acquisition of EMC Corp., to steadily
rising sales, roughly doubling them during his tenure there. He
forged partnerships with Amazon.com Inc. and others to profit from
the growth of cloud computing.
Palo Alto, Calif.-based VMware said its Chief Financial Officer
Zane Rowe would serve as its interim CEO while it conducts a search
for a permanent replacement for Mr. Gelsinger.
For Mr. Gelsinger, the move marks a return to a company where he
spent most of his career. He joined Intel in 1979 and had a
three-decade run. In 2001, the company made Mr. Gelsinger its first
chief technology officer. He's an electrical engineer with a
master's degree from Stanford University.
He will be Intel's eighth chief executive since the company's
founding in 1968 by Robert Noyce and Gordon Moore, whose prediction
about the pace of advancement in semiconductors, known as Moore's
Law, has powered one of the greatest economic advancements in world
history.
With his departure, Mr. Swan will become Intel's
shortest-tenured chief. His predecessor, Brian Krzanich, was in the
role for about five years before his ouster amid what the company
described as a past consensual relationship with an employee that
violated its policies.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
January 13, 2021 10:47 ET (15:47 GMT)
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