Intel (INTC) Announces Key Personnel Changes, Seen as 'Necessary, Inevitable and a Positive'

June 23, 2021 11:33 AM EDT
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Intel (NASDAQ: INTC) announced yesterday key leadership changes as new CEO Pat Gelsinger continues to make changes to reshape the tech business.

Current Intel executives Sandra Rivera and Raja Koduri will have new roles while INTC welcomed new executives Nick McKeown and Greg Lavender. Riviera will become the executive vice president and general manager of Datacenter and AI, while Koduri will head Accelerated Computing Systems and Graphics Group.

McKeown will join Intel as senior vice president and general manager of a new Network and Edge Group, while Lavender becomes a new chief technology officer (CTO) and senior vice president and general manager of the new Software and Advanced Technology Group.

“Since re-joining Intel, I have been impressed with the depth of talent and incredible innovation throughout the company, but we must move faster to fulfill our ambitions,” said Gelsinger. “By putting Sandra, Raja, Nick and Greg – with their decades of technology expertise – at the forefront of some of our most essential work, we will sharpen our focus and execution, accelerate innovation, and unleash the deep well of talent across the company.”

Credit Suisse analyst John Pitzer says latest changes show Gelsinger continues to create his own team at Intel

“We view human capital execution as a key shortcoming of INTC over the last 5 years, and recent hires should be viewed as a cessation of the “brain-drain” under prior CEOs and highly accretive to the depth and breadth of rank-and-file engineers. In addition, new corporate structure should help to execute on Gelsingers IDM 2.0 strategy including: (1) fortifying core x86 IP, (2) accelerating xPU strategy, (3) finding incremental value from software (One API), and (4) executing on IFS (Recent SiFive announcement),” the analyst said in a note.

The momentum is clearly turning for INTC, says Pitzer, and outlines: (1) INTC’s first big.LITTLE core in Alder Lake NBs CPUs, (2) INTC’s first comprehensive chiplet with Sapphire Rapids, (3) Upside demand for Ponte Vecchio in 2H and, (4) Increase likelihood of meaningful IFS endorsements by hyperscalers in 2H22 and CY23 - along with government subsidies.

Similarly, Lynx Equity Strategies analyst KC Rajkumar says reorganization is “necessary, inevitable and a positive for Intel.”

“The battle for servers focusing purely on compute/storage function we believe has been fought and lost. Intel lost that battle to AMD in core-count and memory density; We do not see Intel regaining ground in the foreseeable future. Intel simply needs a new SAM to go after. Networking and Edge computing may be just what the doctor ordered. AMD, with its XLNX acquisition, will challenge Intel there as well. But for now, Intel has a head start. However, it is all in the execution. Intel has a long way to go before gaining Street’s confidence,” the analyst wrote in a memo on INTC.

“We maintain our $70 price target and we believe the stock has good support at current levels in the mid-50s. Investors may forgive near-term weakness in PCs if Intel CEO is able to chalk out a clearer path forward at the upcoming earnings call next month,” Rajkumar concludes.

Intel shares are trading 0.5% lower on the day.



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