Intel Forced Out Its CEO, Shares Dropped 13% in 4 Days
On December 2, 2024, Intel Corporation(NASDAQ:INTC) unexpectedly announced that its CEO, Pat Gelsinger, would retire and resign from his position on the board of directors.
In 2021, Gelsinger returned to Intel from his role as CEO of VMware to replace Bob Swan, who was then the CEO of Intel, with the aim of stabilizing the company. Upon taking office, Gelsinger outlined an ambitious plan to transform the struggling company into a chip manufacturing giant, aiming to compete on an equal footing with Samsung and Taiwan Semiconductor(NYSE:TSM). Unfortunately, instead of implementing personnel reforms (with the company's bureaucratic culture persisting and efficiency remaining poor), he embarked on a costly expansion across the United States and around the world. This initiative severely strained Intel's free cash flow and increased the company's debt burden. Although he secured government investments, positioning Intel as the biggest beneficiary of the U.S. CHIPS and Science Act, and won billions of dollars in security chip manufacturing contracts from the U.S. Department of Defense, it was not enough to reassure investors, who increasingly viewed Intel's aggressive spending as foolish.
Gelsinger failed to reverse Intel's previous issues and lead the company out of its predicament over the past three years. This ultimately led to dissatisfaction among the board of directors with his turnaround plan. In a ridiculous and emotional move, the board forced Gelsinger out without first finding a suitable successor for the CEO position.
Intel investors, who were eager to see changes in the company, initially welcomed the departure of the CEO, with Intel's share price rising by 6% at one point. However, the gains quickly faded and turned into losses, followed by three consecutive days of declines.
