Beleaguered chipmaking giant Intel (INTC) on Wednesday announced that it is replacing its chief executive after two years on the job. The company is replacing fiscally minded Chief Executive Bob Swan with a technology-focused leader in current VMware (VMW) CEO Pat Gelsinger. Intel stock jumped on the news while VMware sank.
Swan will remain chief executive until Feb. 15. He was chief financial officer at Intel when he was elevated to top job in January 2019. Swan had been interim CEO since June 2018 following the resignation of Brian Krzanich.
Intel said the leadership change was unrelated to the company’s financial performance. It expects its fourth-quarter 2020 revenue and earnings per share to exceed its prior guidance provided on Oct. 22. In addition, the company said it has made strong progress on its 7-nanometer process technology and plans to provide an update when it reports its fourth-quarter results on Jan. 21.
Gelsinger has more than four decades of technology and leadership experience, including 30 years at Intel, where he began his career. He has been CEO at VMware since September 2012.
Intel Stock Gets Lift From CEO Change
In morning trading on the stock market today, Intel stock surged 8.4% higher, near 57.70. VMware stock dropped 5.9%, near 134.50.
Intel’s board of directors made the CEO change to help drive the company’s transformation from a maker of central processing units, or CPUs, to a maker of XPUs, a term it uses to encompass a broad range of processors including graphics processors and field-programmable gate arrays.
“After careful consideration, the board concluded that now is the right time to make this leadership change to draw on Pat’s technology and engineering expertise during this critical period of transformation at Intel,” Omar Ishrak, independent chairman of the Intel board, said in a news release.
He added, “The board is confident that Pat, together with the rest of the leadership team, will ensure strong execution of Intel’s strategy to build on its product leadership and take advantage of the significant opportunities ahead as it continues to transform from a CPU to a multi-architecture XPU company.”
Intel stock ranks No. 23 out of 32 stocks in IBD’s Electronics-Semiconductor Manufacturing industry group. It has a subpar IBD Composite Rating of 46 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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