Candidates emerge to succeed Intel CEO Otellini

IDG News Service - Three top executives promoted Monday at Intel are among the leading candidates under consideration to replace Paul Otellini as the company's CEO, according to sources familiar with the chip makers' plans.

Otellini will retire in May as CEO and director after 40 years with the company, Intel said Monday. He spent eight of those years as CEO. Otellini's successor will have the task of maintaining Intel's top position in the slumping PC market while trying to dislodge ARM from the fast-growing mobile market.

Chief Financial Officer Stacy Smith, Senior Vice President and General Manager of Software and Services Renee James and Senior Vice President and Chief Operating Officer Brian Krzanich were named executive vice presidents.

The board of directors will look at both internal and external candidates as part of due diligence, but the executive promotions are not a coincidence, according to sources.

Intel has never hired an external candidate to be CEO. Craig Barrett, Andy Grove and founders Gordon Moore and Robert Noyce came from within internal ranks. Otellini, now 62, succeeded Barrett in 2005, and his decision to step down came as a surprise, considering it was ahead of the mandatory retirement age of 65.

Of the potential candidates, the ones most visible internally are Smith and Krzanich, said Nathan Brookwood, principal analyst at Insight 64.

"Stacy has demonstrated good skills in understanding the company," Brookwood said, comparing Smith to "a young Andy Bryant," who is the company's chairman. Smith is also a good communicator, he said.

Krzanich has been recognized for Intel's strong advances in manufacturing to meet Intel's chip road map, Brookwood said. Manufacturing is key to Intel's success as the company further dives into the mobile market, Brookwood said.

"Intel's a powerhouse, so much of what they do is tied to manufacturing. Krzanich is good at that and he's good at communicating with external audiences," Brookwood said.

Intel's past CEOs have been appointed at turning points in the company's history and Krzanich has an edge in that regard because of the company's strength in manufacturing, said Dean McCarron, principal analyst at Mercury Research.

Otellini fixed a faltering chip road map and helped usher in the mobile era, but margins on chips are falling, McCarron said. Intel's bread-and-butter may remain chips, but future profitability could be in effectively using the manufacturing assets to make chips for Intel and also other companies. High-capacity usage of the manufacturing assets could generate revenue for Intel.

"We've got a shift here happening, which is we're in a difficult economic environment," McCarron said. "That means that for the company to continue to perform well, the focus needs to be the nuts and bolts on operating the company."