Intel CEO announces May retirement

New York TimesNovember 20, 2012 

— After almost 40 years at Intel, Chief Executive Paul Otellini is retiring, just as the company struggles with a momentous challenge: computing’s big shift to mobile devices.

Otellini, 62, surprised the technology world Monday by announcing that he would retire as an officer and director of the chip company in May, three years before he reaches Intel’s mandatory retirement age. The board said it would immediately begin a search for a successor.

During a tenure that began in May 2005, Otellini established a strong track record. He increased Intel’s revenue 57 percent, to $55 billion, at the end of 2011 and slightly widened its gross profit margin. Along the way, Otellini had to settle an antitrust suit for $1.25 billion, convinced Apple to put Intel chips in its computers and cut 20,000 workers. Intel, the world’s largest semiconductor maker, now employs 100,000 people.

But the company’s share price has fallen about 20 percent in Otellini’s time. That is because the world of personal computers and computer servers, which Intel dominated partly through a close relationship with Microsoft, now competes with a global explosion of smartphones and tablets, which connect to large data centers. While Intel has some presence in these areas, it faces many new competitors and challenges, both to its business and to its way of thinking about products.

The right successor to Otellini, said Andrew Bryant, Intel’s chairman, would preserve Intel’s famously engineering-driven culture but turn it into an organization that is better able to anticipate rapidly changing consumer tastes.

“We don’t see the PC category going away, but we see that the market has changed,” Bryant said. “We need to figure out what the market wants.”

Otellini could not be reached for comment. In a statement issued by Intel, he said that “after almost four decades with the company and eight years as CEO, it’s time to move on and transfer Intel’s helm to a new generation of leadership.”

Last month Intel reported that its third-quarter net income fell 14.3 percent from a year earlier, to $3 billion, largely because of poor demand for PCs.

The research firm IDC said worldwide PC shipments fell 8.6 percent to 87.8 million units in the third quarter. Adding to the woes, Microsoft’s Windows 8 operating system, which Intel hoped would lift sales, was released in October to tepid reviews. Intel influences PC manufacturers in a number of ways. Besides designing and making the very core of their products, Intel also invests heavily in related fields; for example, through its venture arm it created a $300 million fund to promote ultrabooks.

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