The interim head of Intel announced the unchanged strategy and forecasts, but the company’s shares fell due to the resignation of his predecessor

Following the sudden retirement of former Intel CEO Patrick Gelsinger, the company’s shares attempted to start the first trading session higher, but have now reacted to this event with an 8% drop in price. The interim head of Intel assured investors that the company is not changing its forecasts and key aspects of its strategy.

David Zinsner. Image source: Intel

Intel CFO David Zinsner, as reported by Bloomberg, made a corresponding statement at a UBS conference for investors, in which he took part as the interim head of the company. Let us remind you that until the emergence of a permanent CEO, he will share this post with Michelle Johnston Holthaus, who heads the product line at Intel. However, at the UBS event, Zinsner was accompanied by Intel executive vice president Naga Chandrasekaran, who oversees the work of the manufacturing division. The latter noted that “there must be a significant cultural change” in Intel’s work.

Now, when producing products, according to him, the main criterion will not be the desire to cover demand by producing an adequate number of chips, but the efficiency of using capital in this process. Before Gelsinger left his post, Intel management expected fourth-quarter revenue of $13.3 billion to $14.3 billion, which was higher than analysts’ expectations at the center of the range ($13.6 billion). After Gelsinger left, this forecast was not revised.

Representatives of Intel’s current management emphasized that they will continue to move along the course set by Gelsinger to transform the company into a world-class contract manufacturer of chips. Intel also has no concerns about receiving subsidies from the US authorities under the “Chip Act,” whose size will approach $7.9 billion. The funds should be used to build factories in Arizona, among other things. Zinsner added that most government support for Intel in this area will come in the form of tax breaks rather than subsidies, and the administration of US President-elect Donald Trump values ​​the manufacturing initiatives.

Meanwhile, the first day after Gelsinger’s resignation was the worst trading day for Intel shares since the beginning of September, as the company’s stock price fell by 6%, and yesterday it fell another 2.3%. Since the beginning of the year, Intel has lost more than half of its capitalization. Cantor analysts cited by CNBC expressed the opinion that it would be wrong to blame all the problems on Gelsinger, and they had been accumulating for years even before his return to the company. Accordingly, it will be extremely difficult for the successor to improve the situation for the better. It will not be possible to quickly solve the accumulated problems, according to experts. Moreover, if Intel continues to insist on the need to develop its contract business, which generates billions of dollars in losses every quarter. Gelsinger’s successor will have to continue cutting costs, and some assets will have to be parted with in this context. The main difficulty will be to find large clients for Intel’s contract division.