Intel names Otellini as CEO - East Valley Tribune: Business

Intel names Otellini as CEO

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Posted: Friday, November 12, 2004 5:31 am | Updated: 5:23 pm, Thu Oct 6, 2011.

SAN JOSE, Calif. - Despite a recent series of product missteps, Intel Corp.’s board on Thursday selected the semiconductor giant’s day-to-day operations chief to replace CEO Craig Barrett, who is stepping aside to become chairman in May.

Paul Otellini, a 30-year Intel veteran who oversaw the Pentium microprocessor’s launch in the 1990s, has been viewed as the most likely candidate for the job since 2002, when he was appointed president and chief operating officer.

But doubts have been raised in recent months as the world’s largest chip maker repeatedly shuffled its product lineup, canceled projects and found itself in the unusual position of following the lead of its much smaller rival, Advanced Micro Devices.

‘‘I think there’s a certain monkey on Paul’s back here taking over the reins of the entire corporation,’’ said Rick Whittington, an analyst at Caris & Co. ‘‘He’s not only got to get the processor group, which he’s been in charge of, back on track, but the entire company.’’

Intel is the largest private sector employer in the East Valley, with about 9,500 workers.

Barrett has a home in Paradise Valley. In 2000, Barrett and his wife Barbara endowed the Arizona State University honors college with a $10 million gift. The Barrett Honors College was named after them.

Former CEO Andy Grove, who will step down as chairman in May and become an adviser, expressed confidence in the upcoming team of both the technologist Barrett and Otellini, who has a background in finance, marketing and sales.

‘‘We now have ... a technologist/manufacturing person with a sales/product guy,’’ Grove said in an interview. ‘‘At least on paper, the complementary nature of these two is closest to the ideal than anything we ever had before. I really like that.’’

It’s the first time in the company’s 36-year history that a nonengineer has been named chief executive.

Otellini, 54, will take over a company that is the dominant supplier of the chips that serve as the brains of personal computers. The problem is the PC market isn’t growing like it used to.

Intel has been shifting from its focus on building chips that simply run faster. Instead, it’s trying to design according to how its chips and other technology are used. Last year’s successful launch of Centrino Mobile Technology is just the first of many upcoming examples.

‘‘To do that, we had to truncate some efforts, we had to focus and we had to make some choices,’’ Otellini said. ‘‘Intel, as big and resource-intensive as we are, doesn’t have unlimited resources. It’s a matter of choices and priorities.’’

In an interview, he also took some of the blame for the company’s cancellation last month of a much-hyped chip for large-screen televisions.

‘‘What was wrong was we made the decision to go public on that before we were sure it was massproduceable in high volume and reliable,’’ he said. ‘‘There was nothing wrong with the risk. The mistake was an error in judgment on my part to go public early on it.’’

In fact, analysts believe Intel’s greatest need is to expand beyond its core PC business.

‘‘They need to have a new strategic vision going forward,’’ said Apjit Walia, a semiconductor analyst at RBC Capital Markets. ‘‘Primarily, they have to figure out the current trajectory of Intel from where they’re a pure PC play into a company that can seek new areas of growth.’’

With the PC business slowing, Intel also must branch out — something that it’s been attempting in recent years with mixed results.

It’s a shift similar to the 1980s, when Intel’s focus moved from the cutthroat business of memory chips to microprocessors.

Intel has made big moves into server chips, including its Itanium processor, which has seen slow market acceptance after a decade of development.

It’s also expanded into providing processors for cell phones and handheld computers as well as flash memory.

At the same time, it’s been trailing its much smaller competitor AMD, which beat Intel to market with nextgeneration PC and server processors that offered many of advanced benefits of Itanium and more robust backward compatibility with existing software.

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