Intel board appoints Otellini as CEO

Intel's board of directors Thursday elected current president and chief operating officer (COO) Paul Otellini as the company's next chief executive officer (CEO), succeeding Craig Barrett who was named new chairman of the board.

The changes will become effective at the company's next stockholders meeting, slated for May 18, 2005.

Barrett will replace Andrew Grove as chairman and Grove will assume the role of senior advisor to the board and senior management, Intel said. He will no longer serve on the board.

The move was widely expected. Intel has a mandatory retirement age of 65, and Barrett passed that milestone this year.

Otellini and Barrett are the right team to lead Intel, Grove said in a statement released Thursday, adding that he is looking forward to his new advisory role.

Company executives will likely remember 2004 and 2005 as a turning point in Intel's history in several ways. The company abandoned its clock-speed focused marketing strategy in favor of a more diverse set of metrics to measure performance, struggled with several product cancellations and delays, and, perhaps most uncharacteristic of all, endured a number of manufacturing problems including glitches and poor capacity planning.

Barrett and Otellini's promotions mean that Intel's founding generation will no longer have a hand in the strategic decisions made at the world's largest vendor of PC and server processors. Otellini will be the first CEO at Intel to not have ascended through the engineering ranks.

Additionally, Intel is facing perhaps its strongest competition in years from Advanced Micro Devices (AMD). After years of denigrating AMD's approach to 64-bit technology, Intel was forced to follow suit with a similar product after server vendors such as IBM, Hewlett-Packard, and Sun Microsystems all embraced the Opteron chip's 64-bit extensions to the x86 instruction set developed at Intel. The smaller microprocessor firm is now in a position of challenging Intel for corporate server accounts, something that Intel's old guard never had to deal with.

Only five men have held the primary leadership roles at Intel since the Santa Clara, California, company was founded in 1968. Robert Noyce founded Intel along with Gordon Moore in 1968, hiring Grove as the first employee. Moore took over as president and CEO in 1975, and in 1979 relinquished the president's role to Grove and became chairman and CEO.

Moore and Grove ran Intel until 1997 when Barrett was brought on board as president. Moore still holds the title of chairman emeritus.

Otellini has been with the Santa Clara, California, chip maker since 1974, holding a variety of positions. He was elected company president and COO in January 2002. Barrett also joined Intel in 1974 and has served as CEO since 1998.

Intel Executive Vice President Sean Maloney is widely seen by analysts and company observers as the front-runner to replace Otellini as president and COO. Maloney is currently responsible for Intel's Communications Group, which makes flash memory and wireless chips.

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