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Intel CEO’s early retirement a surprise

By Steve Johnson, San Jose Mercury News –

In a surprising move that some analysts said reflects the tough road Intel Corp. faces trying to get its chips into smartphone, tablets and other mobile devices, the Santa Clara, Calif., company on Monday said CEO Paul Otellini will step down from the job in May, three years before his mandatory retirement age of 65.

Otellini, who became the company’s fifth CEO on May 18, 2005, succeeding Craig R. Barrett, was vague about his decision to leave in a statement issued by the company.

“I’ve been privileged to lead one of the world’s greatest companies,” said the departing chief executive, who joined Intel in 1974 and turned 62 on Oct. 12. “After almost four decades with the company and eight years as CEO, it’s time to move on and transfer Intel’s helm to a new generation of leadership.”

Intel has a tradition of gradually easing out its retiring CEOs, while carefully grooming their replacements from within the corporation. The company’s announcement that it “will consider internal and external candidates” stuck some industry observers as curious.

“Otellini’s sudden announcement of retirement at 62 years of age will raise a few eyebrows,” Raymond James analyst Hans Mosesmann said in a note to his clients. But he said it may reflect Intel’s troubles getting its chips — which are predominately used in personal computers — into mobile devices, which mostly use more power-efficient chips made by companies licensing a design from British firm ARM Holdings.

In disclosing Otellini’s plans, Intel also announced several promotions of executives who conceivably could be candidates to replace him.

Named executive vice presidents were Renee James, who heads Intel’s software business; Brian Krzanich, Intel’s chief operating officer; and Chief Financial Officer Stacy Smith.

But while all three are “solid executives,” Mosesmann said, none of them appear to have the background needed to help Intel battle its ARM competitors and he added, “Our bet is that Intel goes outside for its new CEO.”

Sterne Agee analyst Vijay Rakesh said Intel also might want to consider as CEO Sean Maloney, who heads up Intel China and who suffered a debilitating stroke in March 2010. But in a note to his clients, Rakesh said Otellini’s retirement might serve as “an opportunity to do a reboot with new blood from outside.”

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