Intel names COO, a possible CEO successor

SAN FRANCISCO Fri Jan 20, 2012 7:30pm GMT

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SAN FRANCISCO (Reuters) - Intel Corp will promote 20-year company veteran and manufacturing expert Brian Krzanich to the post of chief operating officer, making him a frontrunner to one day replace Paul Otellini as chief executive.

The promotion, effective within the next 30 days, is part of a broader management reshuffle that comes a day after the company reported fourth-quarter results that beat Wall Street's modest expectations.

On Thursday, Intel also said it would increase capital spending by about 17 percent to $12.5 billion (8.0 billion pounds) in 2012, quickening efforts to catch up in the tablet and smartphone markets.

Krzanich, 51, will continue to oversee worldwide manufacturing for the world's top chipmaker, while handling internal operations as well.

Otellini, who must retire in four years when he reaches 65, according to a company rule, was the last Intel executive to officially hold the COO position. Vice Chairman Andy Bryant, who Intel previously announced would become full-time chairman, had been handling many of the responsibilities of a COO.

"It could be bit premature to call Brian the next CEO, but all signs point toward that now," said Evercore Partners analyst Patrick Wang.

Intel executive Sean Maloney was seen as a likely eventual successor to Otellini but he took a leave of absence after suffering a stroke in 2010. Last May he returned to head up the chipmaker's operation in China.

Spokeswoman Laura Anderson emphasized that management changes help expand the choices of replacements for Otellini.

Krzanich's promotion underscores Intel's commitment to extending its competitive lead in manufacturing technology. Much of the beefed-up spending announced Thursday will help Intel crank out more of its advanced chips.

Krzanich told Reuters in an interview late on Thursday that as Intel's manufacturing guru he focused on cutting the time it takes to bring new factories on line, which helps make the company more flexible to changes in market trends.

"It's my job to make the company as flexible as it can be. If suddenly our model is off, high or low, how do I make it so we can stop spending, or reduce, or increase spending?"

Santa Clara, California-based Intel is also promoting or redeploying several other executives across its chip architecture, manufacturing, and data-center businesses.

Dadi Perlmutter will become chief product officer, while continuing to helm the Architecture Group. Bill Holt, the company's tech-development chief, now reports directly to Otellini.

HARD CHARGER

Kirk Skaugen becomes Intel's new PC Client Group chief, reporting to Perlmutter.

Skaugen headed Intel's data center business, whose revenue rose to over $10 billion last year from $6.5 billion in 2009.

Intel likely hopes that moving Skaugen over to the PC client group will inject more energy into that slower-growing business, which has been plagued by slow consumer demand and the growing popularity of Apple's iPad.

"He's a hard charger, whip smart, very inspirational," said JMP Securities analyst Alex Gauna. "The guy just doesn't miss a beat when it comes to articulating the goals and the technology merits of his product categories."

Diane Bryant succeeds Skaugen as general manager of the data-center business.

And Kim Stevenson, head of IT Global Operations and Services, succeeds Bryant as chief information officer.

Intel shares were up 2.4 percent at $26.24 in midday trading as Wall Street welcomed its solid quarterly results. Several brokers, including Citigroup and Barclays, raised their target prices on the stock.

(Reporting by Noel Randewich and Edwin Chan; Editing by Tim Dobbyn and Derek Caney)