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Key Points
- The CEO who nearly ruined Intel Corp. (NASDAQ: INTC) will receive $10 million or more as he walks away.
- The question now is whether it is too late to save the semiconductor maker.
- Take this quiz to see if you’re on track to retire. (sponsored)
According to a filing with the U.S. Securities and Exchange Commission, former Intel Corp. (NASDAQ: INTC) CEO Pat Gelsinger will receive between $10 million and $12 million upon his departure. The 8-K described the deal as a “separation agreement.” This award is impressive because he nearly ruined Intel, but it honors the terms of his employment package.
Why He’s Out
Gelsinger became Intel’s chief executive officer on February 15, 2021. The stock traded at $62 a share then. Its current price is $22.50. In that time, its market cap has gone from $400 billion to $100 billion.
While the reasons for Intel’s fall are complex, the core issue can be summed up in one sentence: Gelsinger did not see what became a tremendous demand for artificial intelligence (AI) chips. Intel stayed with what made it successful for almost two decades, providing chips for personal computers and servers. Investors watched AI chip leader Nvidia’s revenue, earnings, and stock price soar.
Gelsinger’s predecessor, Bob Swan, was partially to blame for Intel’s lack of a position in the AI future. In 2018, he had a chance to invest in OpenAI but decided not to. Nevertheless, the decision about AI chips eventually took its toll on earnings and the stock price.
Gelsinger made several strategic decisions early this year to improve Intel’s fortunes. One was to lay off 17,500 people. The other was to invest $100 billion in new factories in four states. Federal grants to help the U.S. chip industry provided much of the capital. It was too little, too late.
Intel’s board probably began considering who the company’s new CEO should be after its most recent earnings report. Revenue dropped 6% to $13.3 billion. The company posted a $3.88 per share loss, compared to $0.07 in the same period the year before.
The board’s challenge is whether Intel can be turned around at all.
Nvidia Price Prediction and Forecast
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