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Who's on the Short List to be Intel's Next CEO?

Added on Nov 21, 2012 by Sharon Gaudin

With Intel CEO Paul Otellini looking to retire next May, the company's board of directors is already on the hunt for his successor.

Now the question is who will make the chip maker's short list to take the helm.

Intel's board of directors has said it's looking both inside and outside the company for Otellini's replacement. However, Intel, which has had just five CEOs in its 45-year history, has always promoted from within.

The task for whomever gets the job will be to combine a wealth of skills and experience to take on some of the major challenges facing the company. Intel may be the biggest chip maker in the world with a strong financial standing, but it's also dealing with strong competition from ARM, a PC industry in decline and a need to move fast into the mobile industry.

"I think it's almost a sure bet that Intel will find their next CEO from within their own ranks," said Dan Olds, an analyst with The Gabriel Consulting Group. "Bringing in an outsider to run a company as large and complicated as Intel in such challenging times would be perceived as highly risky by the board and isn't likely to happen. There's also the question of finding an outsider who has the knowledge and vision to step up to the plate and drive the Intel machine."

As Intel announced Otellini 's retirement plans, it also reported promotions for three senior leaders to the position of executive vice president -- Renee James, head of Intel's software business; Brian Krzanich, chief operating officer and head of worldwide manufacturing; and Stacy Smith, chief financial officer and director of corporate strategy.

That automatically moves James, Krzanich and Smith onto most industry analysts' short lists for Intel's next CEO.

However, Ken Dulaney, an analyst with Gartner who says Intel is 70% likely to promote from within, said that while James has a shot at being named CEO, his big bet would be on David Perlmutter, a general manager with the Intel Architecture Group and Chief Product Officer.

"This would be my choice," he added. "Intel needs a product architect after focusing in on sales and operations.... They may look for an operations person, but what they need is a product strategist."

Jack Gold, an analyst with J. Gold Associates, also put his money on Perlmutter or James. "Renee has a pretty large organization under her, especially with the McAfee acquisition," he said. "And services and software is a growth area. She's done pretty well with that."

Other analysts pointed to Justin Rattner, Intel's CTO and head of Intel Labs, as a potential candidate for the top seat. Gold called Rattner "someone who has been there a long time and who has shown a good deal of success."

While many in the industry argue that Intel's next CEO needs experience executing in the mobile market, Patrick Moorhead, an analyst with Moor Insights & Strategy, said the new CEO could bring in people to help him or her figure out mobile. But the CEO still needs to push the company forward and execute on strategy.

That has Moorhead putting Krzanich and Smith at the top of his own short list.

"Smith has the financial chops and corporate development skills to invest or buy a mobile future for Intel, but he would need a hard core product lieutenant to balance out his skills," he said. "I think they will take a hard look at Krzanich, but he is a bit of an external unknown, and Intel needs a known external face to provide the confidence to investors and customers."

Otellini, Intel's first CEO who was not an engineer, has opened the door to someone who has more of a background in marketing, according to Olds.

"He's proven that you don't have to be able to design chips in order to successfully run the most important chip company in the world," he added. "I think we'll probably see someone with significant marketing skills get the nod, regardless of whether they're an engineer or not."

Olds also pointed out that Intel has six months to work this out.

"This is sort of like trying to handicap the selection of a new pope," said Olds. "Intel is going to take some time and they're going to do their best to keep their deliberations secret. I think we'll need to wait for the white smoke to rise above Intel headquarters in Santa Clara."

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