Intel disappoints investors by appointing insider CEO

3 May 2013
By Edd Gent
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Intel yesterday appointed Brian Krzanich as chief executive

Intel yesterday appointed Brian Krzanich as chief executive

Intel has disappointed investors by appointing an insider as CEO rather than an outsider pushing for aggressive changes.

The world's largest chipmaker yesterday appointed Brian Krzanich as chief executive and also announced software expert Renée James had been elevated to the post of president, the highest position a woman has ever held at the firm.

Her appointment signalled to some that Intel, while likely intending to stick with its formula of intense investment to keep it ahead in the microchip technology game, is willing to explore new growth areas.

The company said last November that it might go external for its next CEO, raising hopes that it might find someone to shake it out of recent doldrums that have seen it lose ground in the mobile revolution.

Seen as a frontrunner for the job since November, Krzanich inherits a company with margins of almost 60 per cent that has all but extinguished rival Advanced Micro Devices in the past few years, and is now the dominant maker of microprocessors for computers and servers.

But the company is in danger of finding itself sidelined as mobile devices such as tablets and ever more powerful smartphones accelerate a contraction of the personal computer market, with the majority of gadgets today running processors based on rival ARM’s power-saving chip architecture.

"An external candidate might have been a better choice, with no negative reflection on Brian, simply because of the juncture Intel is at with what's happening in the PC market and the need to take major action outside of PCs," says Cody Acree, an analyst at Williams Financial Group.

"Brian may very well come in and make those same very difficult dramatic choices, but it's less likely."

He will take on the top job at the company's annual shareholder meeting on May 16, replacing Paul Otellini.

A relative unknown outside the tight-knit semiconductor industry, Krzanich has worked at Intel since 1982 rising to chief operating officer just over a year ago, and the 52-year-old has earned a reputation for being a decisive leader who liked to keep a low profile.

Intel on Thursday also stressed that he will have a strong partner in James, who in 2011 spearheaded Intel's $7.7bn acquisition of number two security software firm McAfee.

She ran software product and service sales as well as a team of engineers focused on improving the performance of Microsoft's Windows 8 and Google's Android software when run on the company's microchips.

Her elevation "puts emphasis on the many businesses Intel is in beyond just chips. This is an important promotion, and it clearly signals the board wants to make Intel a much broader company," says Jack Gold, who runs research outfit Jack Gold Associates.

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