WASHINGTON: Intel, seeking a replacement for departing chief executive Paul Otellini, needs a candidate with credentials internal contenders lack: a record of success in the market for mobile-device semiconductors.
The world's largest chipmaker has said that it named chief operating officer Brian Krzanich, chief financial officer Stacy Smith and software head Renee James to the position of executive vice- president. The promotion marked them as most likely to succeed Otellini, who's leaving three years before Intel's mandatory retirement age.
Intel ascended to the top of the personal-computer industry with a strategy of hiring CEOs from within, and it's leaning toward internal candidates this time as well, people with knowledge of the plan said.
Yet under Otellini and his deputies, Intel has failed to make headway in the market for mobile devices and may be well served by a CEO from the outside who can do a better job equipping Intel for a post-PC era marked by surging demand for tablets and smartphones."I don't know if any of them have the star power that you may need in a new Intel CEO," said Craig Berger, an analyst at FBR Capital Markets.
"It's going to be a difficult and challenging transition for anybody." An executive from Apple or Qualcomm, which have sprinted ahead in semiconductors for mobile devices, might be a better fit, Berger said. Sanjay Jha, former CEO of Motorola Mobility, should be considered, said Doug Freedman, an analyst at RBC Capital Markets.
Intel's board will weigh internal and external candidates to replace Otellini when he retires in May, Intel said in a statement. The company has never chosen a CEO who wasn't groomed internally. Intel instead typically has appointed its operating chief to the top post. Otellini and his predecessor, Craig Barrett, stepped up from that position.
"We have excellent internal candidates but will also look outside," Chuck Mulloy, an Intel spokesman, said in an e-mailed statement.
Krzanich, 52, was promoted to the COO role in January. He was head of the company's manufacturing operations and took on added responsibility for human resources. He joined Intel in 1982 after graduating with a degree in chemistry.
"The strategy is in place, but the market isn't recognizing it yet," said Kevin Cassidy, an analyst at Stifel Nicolaus.
James, 48, would be Intel's first female chief executive if she were chosen. Her background would make her well suited for the top job, given the role software plays in setting direction for the hardware running it, said Hans Mosesmann, an analyst at Raymond James & Associates.
"She thinks outside the box and is a software person," Mosesmann said. "That, in many regards, is the future." Intel succeeded for years with a strategy of making powerful chips that help machines carry out complicated tasks quickly.
Now, the priority is chips that sip power and help smaller computers carry out multiple tasks at the same time. -
"The board is going to have to be forward looking and find somebody who is outside who would make a difference," Mosesmann said.
Chips based on ARM Holdings technology are at the heart of almost all phones and tablets. ARM licenses its designs and technologies to companies including Apple, Qualcomm and Samsung Electronics. Intel should consider an executive who has experience changing course at a large company, said Freedman at RBC.
"If the board really wants a change, they've got to go and get a turnaround guy," Freedman said. "That's difficult for a company the size of Intel. You'd need someone from a big company."
The board might look at Jha, formerly of Motorola Mobility, or executives from Qualcomm, Freedman said. Jha, 49, also served as operating chief at San Diego-based Qualcomm. Another possible contender is Qualcomm COO Steve Mollenkopf.
Qualcomm, the world's largest maker