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James Li
James Li
Articles (1494)  | Author's Website |

Daniel Loeb Target Intel Appoints Tech Leader as New CEO

The semiconductor giant heeds Third Point's strategic plea

Shares of Intel Corp. (NASDAQ:INTC) soared over 7% Wednesday morning on the heels of the semiconductor giant appointing VMWare Inc. (NYSE:VMW) CEO Pat Gelsinger as Intel's new CEO.

The news comes not even a month after the news came out on Dec. 23, 2020 that Third Point leader Daniel Loeb (Trades, Portfolio) sent a letter to Intel's Chairman of the Board Omar Ishrak urging the company's board of directors to seek strategic alternatives to regain its "gold standard of innovative microprocessor manufacturing" and earn back market share from competitors like Advanced Micro Devices Inc. (NASDAQ:AMD) and Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM). According to the GuruFocus Industry Overview pie chart for the semiconductor industry, Intel has an industry weight of approximately 10.2%, second to NVIDIA Corp.'s (NASDAQ:NVDA) weight of 15.8%.

Company brings in tech leader as new CEO

Ishrak said on Wednesday that Gelsinger brings to Intel 40 years of technology and leadership experience, including 30 years of experience at the company. The chairman added that "now is the time" to "draw on Pat's technology and engineering expertise during this critical period of transformation" of the company.

Gelsinger added that he gained strong knowledge of the company's history and technologies by working with Intel founders Gordon Moore, Robert Noyce and Andy Grove and is "thrilled" to rejoin and lead the company forward "at this important time for the company, our industry and the nation." The former Intel chief technology officer drove the creation of key industry technologies like the USB, Wi-Fi and the 80486 processor during his past tenure and now believes that the company has high potential to "reshape the future of technology."

Stock rises on new CEO appointment

Shares of Intel traded around $57.18 following the announcement, approximately 7.18% from the previous close of $53.24. The stock is modestly undervalued based on a price-to-GF-Value ratio of 0.93.

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GuruFocus ranks Intel's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 7 and an operating margin that has increased approximately 4.1% per year on average over the past five years and is outperforming over 95% of global competitors.

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Gurus with large holdings in Intel include PRIMECAP Management (Trades, Portfolio), Ken Fisher (Trades, Portfolio)'s Fisher Investments, and Chris Davis (Trades, Portfolio)' Davis Select Advisors.

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One hundred GuruFocus users said they are buying shares of Intel according to GuruFocus Virtual Baskets statistics. Likewise, 19 users said they are considering buying shares while 13 others placed Intel into their "researching" basket.

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Disclosure: I am long Intel.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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