This week began with the news of the resignation of Intel CEO Pat Gelsinger, who began his career at the company in his distant youth, and over the past almost four years has been trying to save it from the consequences of the mistakes of his predecessors. The stock market initially reacted to his resignation by increasing the price of Intel shares, but by the end of the working week they fell in price by 18%. Between December 2 and December 6, Intel fell in price by 12.98 million.
Image Source: Intel
In fact, after Gelsinger’s sudden expulsion, Intel shares fell almost continuously in price, several percent each trading session, and in total they have fallen in price by 58% since the beginning of this year. This week was the worst for Intel shares in the last three months. The current year as a whole could be their worst period since 1983.
As Bloomberg notes, even the statements made by current Intel management in the person of CFO David Zinsner at the UBS technology conference after Gelsinger’s resignation failed to inspire investors. The interim head of the company said that Intel will continue to pursue its planned development path, and the contract business is an important part of the strategy. The revenue forecast for the current quarter remained unchanged, and the CFO promised to strengthen control over expenses, but these statements did not help stabilize the company’s stock price.
Analysts at Bokeh Capital Systems, for example, were confused by the fact that two Intel executives, CFO David Zinsner and head of client division Michelle Johnston Holthaus, were appointed interim CEOs. Such decisions, according to experts, will lead the company to unmanageability, and will create a feeling of uncertainty among investors.
The situation is also aggravated by other unfavorable events of the outgoing year for Intel. The company turned out to be overly optimistic in its forecast for demand for its own Gaudi computing accelerators, and by August it became clear that the production division was generating huge losses. As Bloomberg explains, at current levels, only seven out of 52 surveyed analysts recommend buying Intel shares. Some investors still believe that Gelsinger was the best candidate to implement a large-scale restructuring of Intel’s business, and it will be extremely difficult to find a worthy successor. The addition of Intel’s board of directors this week was little consolation for investors.
Experts at Globalt Investments warn that large-scale reforms like those initiated by Gelsinger take many years, and the same General Electric has stretched them out over decades, and chip production is a more competitive business, which leaves Intel management little room to make mistakes in their decisions. The company has decent scientific and personnel potential, but it is necessary to understand how best to use it.