Getting rid of your chief executive isn’t a panacea for deep-rooted problems, as Intel shareholders have discovered. Pat Gelsinger’s decision to step down was initially greeted enthusiastically, as shares popped 5 per cent higher, only to subsequently slide lower.
Investors may recall how Gelsinger was once seen as Intel’s potential saviour, with shares rallying 8 per cent upon news of his appointment in January 2021, but it gradually became clear there would be no easy fix for Intel’s problems. The chip giant, which employs 4,900 people in Ireland, has lost significant ground to companies such as Nvidia, AMD and TSMC.
In August it announced it was cutting 15 per cent of its global workforce. In October, Intel posted a record $16.6 billion (€15.7 billion) quarterly loss. In November, investors learned Nvidia was replacing Intel in the Dow Jones Industrial Average. Shares are down 55 per cent this year.
Sometimes, investors cry out for change, and respond euphorically when they get it – think of shares in Starbucks, which spiked 25 per cent after changing chief executive in August. Starbucks shares have since built on their gains, but Intel’s problems are deeper.
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Gelsinger was not responsible for Intel’s problems, Cantor analysts said, adding they “do not see a quick fix”. That was echoed by analysts at Bernstein, who said Intel’s situation “seems likely to keep getting worse before it gets better, and the ultimate fate of the company seems even more uncertain”.
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