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Intel likely to look inward for visionary CEO
2012-11-23 09:19

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 US$10 billion annual capital expenditures a plus.

Intel Corp raised eyebrows on Wall Street and in Silicon Valley this week when it said it would consider an outsider to take over from the 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.

Outside customers

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 consulting firm Insight 64.

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, according to experts.

While the idea of an iconic visionary like Steve Jobs stepping in to lift Intel into the mobile market 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 US$53 billion a year in sales, a US$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."

Tumultuous tenure

Silicon Valley peer Hewlett-Packard Co exemplifies the risks of a poorly thought-out external hire, recruiters and analysts say. During his tumultuous 11-month tenure, former software CEO Leo Apotheker engineered the widely panned US$11 billion acquisition of Autonomy, which HP accused this week of accounting wrongdoing on the way to swallowing an US$8.8 billion charge. He also presided over several quarters of lackluster financial results.

"I don't think (Intel) needs a 180-degree transformation. You don't want somebody like a Leo Apotheker coming on and being your complete undoing," said JMP analyst Alex Gauna. "Because of how badly things have gone for HP, the most probable scenario for (Intel) at the end of all this in May is that it looks very much the same."

But Mel Connet, a tech industry executive recruiter at Heritage Search Partners in Menlo Park, California, said Intel's culture needs a shakeup that justifies looking for an outside candidate, while being mindful of the HP example.

"My only advice would be not to use the same search firm that HP used," said Connet, whose firm has not been contracted by Intel for its search.

Strong contender

Brian Krzanich, chief operating officer and Intel's manufacturing guru, is frequently mentioned by Intel employees as a strong contender for CEO, partly because manufacturing is at the heart of Intel and previous chief executives have been promoted from the COO position.

Chief Financial Officer Stacy Smith is well known by financial analysts and many favor him, believing he is the best bet for keeping Intel stable.

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Source:Shanghai Daily