Intel Names Krzanich CEO to Replace Otellini

By Jeffrey Burt  |  Posted 2013-05-02 Print this article Print

Analysts also said Krzanich's operational expertise will be crucial for Intel going forward.

"We have always viewed manufacturing as Intel's core sustainable advantage, and Mr. Krzanich understands this aspect of Intel's business better than anyone else," Ross Seymore, research analyst at Deutsche Bank, wrote in a research note. "The push into the foundry business is perhaps the clearest evidence that the company intends to press its manufacturing advantage into adjacent markets. Given the limited number of external candidates with [integrated device manager] experience, it was always our view that an internal candidate would be the next CEO."

Jack Gold, principle analyst with J. Gold Associates, said a focus on operational excellence rather than just engineering expertise "is important as Intel needs to optimize its huge investments in its fabs. This needs to include filling those fabs by selectively bringing in outside work that gets utilization to higher levels and complements production of its core products.

"Putting an 'ops guy' in charge also reinforces Intel's move to be more competitive and decrease its overhead, which it has been doing over the past couple of years," Gold said in a research note. "A leaner company is what the board has been looking for (as well as the financial markets), and this promotion sends the message it will continue to emphasize a 'lean and mean' approach to business."

The promotion of James to president also was important, according to the analysts. It keeps a valuable executive in the fold, and also indicates the company's desire to expand beyond its traditional PC and server chip into growth areas, including software.

"It clearly signals the board wants to make Intel a much broader company, with increased emphasis/reliance on software and services," Gold wrote. "It also allows more of a balance between the core chip engineering businesses and the acquired SW and services businesses (e.g., WindRiver, McAfee). The synergies with these businesses have not been as great or rapid as they should be, and this move should give them increased exposure and emphasis in the overall Intel ecosystem. Expect to see increased cooperation and a bigger portion of the revenue come from this refocus, as well as more of the key technologies making their way into the base silicon (e.g., security)."



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