Good morning. Intel Corporation CEO Pat Gelsinger stepped down from the company and resigned from the board on Monday. The board gave him the option to retire or be fired, according to reports. The chipmaker, once the world’s largest, has struggled to keep up with artificial intelligence computing for some time. And now his CFO is tasked with helping keep the company alive.
David Zinsner, EVP and CFO, and Michelle (MJ) Johnston Holthaus, CEO of Intel Products, will serve as interim co-CEOs while the board of directors searches for a new CEO. Zinsner joined Intel, a Fortune 500 companyas Chief Financial Officer in January 2022. He has more than 25 years of financial and operational experience in semiconductors and manufacturing, including CFO roles at Micron Technology, Inc. and Analog Devices.
Zinsner will continue to perform his CFO duties while serving as interim co-CEO, Intel confirmed in an email. Holthaus joined Intel in 1996 and held a number of leadership roles in product sales and marketing.
“With Dave and MJ’s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating costs and capital,” Frank Yeary, Interim CEO, it is stated in the press release.
Intel was once dominant in its core business of central processing units. But competitor AMD now has a significant market share. At the time, Intel failed to see the extent to which graphics chips would dominate the AI market. Nvidia has taken a graphics processing unit used for video games and turned it into a powerhouse for training and running AI models to dominate the new field.
Gelsinger, CEO since 2021, had a more than 40-year career at Intel. He bet the company on 18A, a new chip manufacturing process he hoped would be a viable alternative Taiwanese semiconductor manufacturing Co., (TSMC) the world’s leading contract chip manufacturer, Wealthis Jeremy Kahn recently published.
Intel’s “delicate” financial position
Nearly three years after joining Intel as its chief financial officer, Zinsner will now co-lead a company in deep trouble.
I asked Peter Cohan, associate professor of the practice of management at Babson College, for some insights. He thinks Zinsner was chosen as interim co-CEO because Intel needs to “prevent its financial position from deteriorating so much that it becomes difficult for the board to hire a new CEO to turn the company around,” he told me.
In Q3, the company’s net loss amounted to 16.6 billion dollars due to factors including restructuring costs and production unit losses. Intel shares fell more than 60% during Gelsinger’s tenure. The company dropped out of the industry first 10 companies by market capitalization, the list is now led by Nvidia and TSMC, Wealth reported. S&P Dow Jones Indices announced Nov. 1 that Nvidia will replace Intel on the Dow Jones Industrial Average.
Why did Intel go down the path of interim co-CEOs? “Simply put, this deal is the board’s way of saying that Intel’s financial position is too delicate for a manufacturing and finance person to split the job,” Cohan said.
Appointing an interim co-CEO “sends a clear message to shareholders that the board is covering its bases,” Scott W. Simmons, co-managing partner of executive search firm Crist Kolder Associates, told me.
Zinsner is a four-time CFO with deep roots in R&D-driven technology companies, Simmons said. “His knowledge and experience are invaluable and a perfect complement to Holthaus, whose role is to strengthen and advance the product portfolio and manufacturing capabilities,” he said.
It will take a lot of teamwork to turn Intel around.
Sheryl Estrada
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The following sections of CFO Daily are curated by Greg McKenna.
Leaderboard
Anu Subramanian will resign from the position of financial director Bumble (Nasdaq: BMBL), which manages online dating and social networking applications, to take advantage of other opportunities, the company said. He will continue to serve through March 14, including the company’s year-end earnings and Form 10-K filing, and will assist with the transition as the company searches for a successor. subramanian joined Bumble as CFO in 2020 and helped lead the company’s 2021 IPO.
Mark Scheiwer he was promoted to interim financial director Scotts Miracle-Gro Company (NYSE: SMG), a lawn and garden care company, effective Dec. 31. He will succeed Matt Garth, who will depart after serving in the role since December 2022. Scheiwer joined the company in September 2011 and has held several finance roles of increasing responsibility, most recently serving as vice president and treasurer. He previously held the position of senior auditor at Ernst & Young.
Big deal
Americans felt the impact of inflationary pressures on their own household financesbut new analysis from USAA reveals that members of that country are in a stronger position than before COVID. Using account and product data from the bank’s 900,000 members currently serving in the military, the report found that military members saw an average 19 percent increase in savings and a 23 percent jump in current assets between 2019 and 2023.
When inflation peaked in four decades, however, members of the military also had to adapt. The usual current and savings balances of service members decreased last year by 12% and 10%, respectively. At the same time, members increased their daily spending in several key categories, including grocery and pharmacy (32%), fuel (36%) and utilities (13%).
“While it’s great to see service members in a better place than they were before the pandemic, we can’t ignore the reversal in trends,” said Michael Moran, the company’s interim bank president. “As inflation continues to weigh on military households, we encourage military members to be careful with their personal finances and preserve some of these hard-earned gains.”
Going deeper
“Billionaire Fiat heir takes control of Stellantis, parent of Jeep and Ram, following CEO Carlos Tavares departure,” the new report from Wealth‘with Christian Hetzner. Problems in the US market have punctuated the rapid and stunning decline of one of the world’s largest car manufacturers, which Tavares helped to create by merging France’s PSA and Fiat Chrysler Automobiles in 2019. For now, the chairman of the board is John Elkann, the great-great-grandson of Fiat’s founder Giovanni Agnelli will serve as head of the newly formed interim executive committee.
Overheard
“The Trump administration has promised that imposing tariffs on China will bring manufacturing jobs back to the United States and that we don’t really need to worry about Chinese retaliation. We think both of these claims appear to be wrong.”
— Gordon Hanson, professor at the Harvard Kennedy School, told the Harvard Business Review about his research on economic and political effects trade war during the first term of President-elect Donald Trump.
