Intel CEO ousted by activist hedge fund, shareholders rejoice

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Intel

While demand for computer and gaming parts has been high ever since the coronavirus first emerged, not all companies in this area have been doing well. Intel (NYSE: INTC), one of the largest chipmakers in the world, has been struggling amidst manufacturing issues. With discontent brewing for quite a while now, shareholders have finally voted to oust CEO Bob Swan.

Becoming the shortest-tenured CEO in Intel’s history, Bob Swan was voted to be succeeded Pat Gelsinger, who was the former Chief Technology Officer for Intel. The move was largely pressured into effect by an activist hedge fund known as Third Point, which wrote a letter back in December to Intel’s Chairman saying that Intel needed to make some drastic changes if it wanted to pull itself back together.

Intel has been suffering from manufacturing issues for a while now, resorting to third party manufacturers for some of its chips, something never seen before from the company. Additionally, the company announced a series of product delays this year as well.

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,” said Intel Chairman Omar Ishrak following the announcement. “Swan is a class act and did the right thing for all stake holders stepping aside for Gelsinger,” added Daniel Loeb, head of Third Point.

While Intel’s stock has been struggling this past year, shares of other chipmakers have soared. Companies like Nvidia and AMD have seen their stock prices rise in 2020, whereas Intel has languished amidst manufacturing issues.

However, despite these problems, Intel still is expected to report record sales for 202. Financially speaking, Intel is still doing alright. From a product development and fulfillment standpoint, however, it’s falling behind. Sooner or later, this will be reflected in Intel’s financial results if nothing is done to change the situation.

Shares of Intel shot up as much as 10% on Wednesday in response to the news, which was well received by shareholders. Many were getting frustrated by the company’s perceived failure to improve its situation, hence why activist hedge funds have been able to wield so much influence among shareholders. Whether or not Intel will get its act together in the coming months and years is yet to be seen, but if it can’t, there are many other chipmakers that are willing to compete with Intel for a spot as America’s top chipmaker.

 

Intel Company Profile

Intel is one of the world’s largest chipmakers. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It is also the prime proponent of Moore’s law for advances in semiconductor manufacturing. While Intel’s server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has declined. These include areas such as the Internet of Things, memory, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, recently acquiring Altera, Mobileye, Nervana, and Movidius in order to assist its efforts in non-PC arenas. – Warrior Trading News

 

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