Bloomberg News

Intel Sets Up Would-Be Otellini Successor in Krzanich as COO

January 23, 2012

(Updates with an analyst’s comment in 11th paragraph.)

Jan. 20 (Bloomberg) -- Intel Corp., the world’s largest semiconductor maker, promoted Brian Krzanich to chief operating officer, elevating a possible successor to Chief Executive Officer Paul Otellini.

Krzanich, 51, had been senior vice president in charge of worldwide manufacturing, Santa Clara, California-based Intel said in a statement today. The stock closed at a more than four- year high, bolstered by upbeat results released yesterday.

Intel has appointed CEOs from within the company since its founding in 1968, and Otellini and his two predecessors held the COO title before taking the top job. In his new role, Krzanich will retain oversight of manufacturing, while taking on responsibility for information technology and human resources.

“Are they grooming him to be the next CEO?” said Patrick Wang, an analyst at Evercore Partners Inc. in New York. “If history is any guide, yes.”

Wang also said, “I wouldn’t jump to that conclusion just yet.”

Under Intel bylaws, Otellini, 61, can continue to serve as CEO until May 2016, when he’ll reach the company’s mandatory retirement age, said Laura Anderson, a spokeswoman. Today’s promotion isn’t related to CEO succession planning, and the company continues to develop a deep bench of executive talent, she said.

Intel rose 2.9 percent to $26.38 today in New York, the highest closing since Dec. 31, 2007. The stock has climbed 26 percent in the last 12 months.

Barrett, Grove

Otellini served as chief operating officer under his predecessor, Craig Barrett, who himself filled that role under Andy Grove. Grove also served as COO, a position that has been vacant since Otellini became CEO in 2005.

Krzanich is taking on responsibilities held by Chief Administrative Officer Andy Bryant, who -- as previously announced -- is becoming chairman of the board, Intel said.

Intel typically moves senior managers into different roles to give them broader experience and test their ability to handle new challenges. That’s probably what Intel is doing with Krzanich, said Alex Gauna, an analyst at JMP Securities LLC.

“I’ll bet he’s going to have to prove himself,” said Gauna, who has a “market outperform” rating on Intel and is based in San Francisco. “It doesn’t force their hand at this juncture.”

Chemistry Major

Krzanich has been with Intel since 1982, when he joined the company after graduating from San Jose State University with a degree in chemistry.

Intel yesterday announced it would boost spending this year on equipment and facilities to $12.5 billion, plus or minus $400 million. The company says its ability to produce microprocessors with the most advanced technology is a key advantage. Krzanich has played a central role in implementing new production techniques, according to his company profile.

Intel announced the management rearrangement a day after releasing a forecast for first-quarter revenue that may exceed analysts’ predictions. The promotions “recognize outstanding performance” and will occur in the coming 30 days, Intel said.

The company also named Dadi Perlmutter as chief product officer. Kirk Skaugen, a vice president in charge of Intel’s data-center business, will lead the personal-computer chip business. He succeeds Mooly Eden, who is moving back to his native Israel, at his request, Intel said.

Diane Bryant, the company’s current chief information officer, will take Skaugen’s position.

--Editors: Tom Giles, Nick Turner

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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