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To: Donald Wennerstrom who wrote (58211)	11/19/2012 11:44:23 AM
From: Donald Wennerstrom	1 Recommendation Respond to of 95881

Nov 19, 2012 10:59 AM INTC: Otellini’s Departure Comes Amidst Mobile Failure, Samsung Challenge, Say Longbow, Piper By Tiernan Ray Shares of Intel ( INTC) are up 3 nets at $20.22 after the company this morning announced that chief executive Paul Otellini will step down in May and the board is seeking his replacement. The stock was briefly halted in pre-market trading and shares dipped slightly at the open but have recovered from those earlier losses. JoAnne Feeney with Longbow Research, who rates Intel shares a Neutral, notes that Otellini, at 61, was well below the mandatory retirement age of 65 at Intel, with “plenty of time on his clock.” She writes that the announcement six months in advance may suggest an outside candidate is the primary approach by the board, which would be a break from previous “carefully groomed” internal successors at Intel: We see this announcement — coming as it does without a named successor may very well reflect Otellini’s failure to position the company for the transition to mobile devices sooner than he has. It is also likely that the Board sees that Intel needs a sharp change in direction–not just a change towards mobility markets, but also to include foundry operations or some other move to capitalize on Intel’s manufacturing leadership. Gus Richard with Piper Jaffray, who has a Neutral rating as well, and a $19 price target, writes this morning that CFO Stacy Smith, who was promoted to executive vice president as part of today’s announcement, could be a candidate to replace Otellini, as well as COO Brian Krzanich or possibly Intel’s mobility executive Dadi Perlmutter. Intel’s CEO of eight years is leaving the company amidst what we see as difficult challenges for the company in the post-PC era. While Intel’s manufacturing capability is currently second to none, Samsung [Electronics ( 005930KS)] is catching up. Increasingly, new designs favor less expensive process technology, not high performance transistors used in PC CPUs. In the mobile era, customers such as Google ( GOOG), Facebook ( FB) and Apple ( AAPL) are designing their own mobile processors and server processors. As the PC market has stagnated, Intel has tried to pivot to mobile and increasingly to foundry. However, Intel has had very limited success in mobile and Intel’s prices for foundry wafers are 3x that of TSMC’s. The new CEO will also have numerous internal conflicts to resolve while moving the company forward. Although Otellini’s departure is billed as a retirement, in many cases it is not a positive sign when a CEO leaves. Maintain Neutral. blogs.barrons.com