By Dan Gallagher
Wall Street is cheering Intel's choice of new chief executive. If history is any guide, the honeymoon will be brief.
Intel's shares jumped 16% early Thursday following the appointment of Lip-Bu Tan. The former CEO of Cadence Design Systems has plentiful chip-industry experience and served a stint on Intel's board of directors. Analysts see him as a solid pick for what looks like the toughest job in the sector.
"Lip-Bu Tan in as CEO at Intel was as good as stakeholders could have hoped for," TD Cowen's Josh Buchalter told clients Thursday. But he cautioned that whatever Tan's strategy, it was unlikely to yield results for some time.
Ultimately, time wasn't on the side of Intel's last CEO. Pat Gelsinger left less than four years into the job, before the completion of an ambitious plan to catch up with arch-rival TSMC. Investors started bailing on the stock long before then.
Intel's shares jumped 7% on Gelsinger's appointment in early 2021, and rallied a further 15% over the next three months. The stock then entered a downward spiral, shedding nearly two-thirds of its value over the next 18 months.
Tan is at least getting the benefit of a much lower starting point. Intel's stock has seen some jumps over the last few months on deal rumors, but shares were still near their 14-year low and trading below book value as of Wednesday's close.
"He has a big job in front of him and a lot of wood to chop," said Bernstein's Stacy Rasgon, adding that if Tan failed, Intel was likely unfixable. The new CEO won't have a lot of time to sharpen his axe.
This analysis comes from the Journal's Heard on the Street team. Subscribe to their free daily afternoon newsletter here.
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March 13, 2025 10:47 ET (14:47 GMT)
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