Intel Is Losing At Least Two High-Level Execs: Concern Or Shakeup?

Chip giant Intel Corporation INTC announced the departure of two high-level executives, leaving the Wall Street speculating whether the change is either a "shake-up" or "turmoil."

In an email to employees, Intel announced the departure of Doug Davis, the head of the IoT (Internet of Things) group, and the resignation of Kirk Skaugen, the head of Client Computing Group (CCG).

"Doug first started with Intel in 1984 and has held numerous leadership roles over his 32-year career here. He is retiring at the end of 2016 in order to "devote more of his time to family, friends and other interests," an email said.

"Skaugen has decided to leave Intel for his next career opportunity."
The news comes days after a Bloomberg report that said Aicha Evans, head of Intel's mobile business, was leaving the company.

More than the departure of Davis, the Street expressed "surprise" at the resignation of Skaugen, whose last day at Intel will be April 8 and would be succeeded by Navin Shenoy.

Sterne Agee, for one, said, "We're surprised to see Kirk leaving given his seniority and successful tenure at DCG, but this confirms what we already know - that CCG's performance has been disappointing. We know of several opportunities that would likely welcome Kirk."

"We're uncertain whether these changes signify a new strategy, or ongoing executive changes that target culture change," analyst Douglas Freedman added.

Freedman has a Buy rating and $38 price target on Intel shares, which were down 0.33 percent at $31.90.

Bernstein Looks At Situation Too

Meanwhile, a note from Bernstein says the recent departures may have a connection with the hiring of Venkata Murthy Renduchintala in November following his departure from QUALCOMM, Inc. QCOM. Notably, the email was signed by both CEO Brian Krzanich and Renduchintala.

"At Intel Dr. Renduchintala was named President of the Client and IoT Businesses and Systems Architecture Group, reporting to CEO Brian Krzanich, and with Mr. Skaugen, Mr. Davis, and a host of others all reporting to him; essentially Dr. Renduchintala is now the #2 person at Intel, placed there over the heads of a number of other long-serving successful executives," analyst Stacy Rasgon wrote.

Rasgon continued: "We note the excerpt of the employee email posted on the company's website was signed "Brian and Murthy," and the Oregonian newspaper quoted a portion of an email purportedly sent by Dr. Renduchintala to employees (though not publicly distributed) as indicative of further potential changes to come. We would therefore not be surprised if there were a connection between Dr. Renduchintala's hiring and recently announced departures (indeed, we would be shocked if there were not)."

Though Rasgon noted that the prospect of a shake-up following Renduchintala's arrival is not necessarily surprising, "Still, it is hard to argue that the (apparently) targeted execs had it coming, especially Mr. Skaugen - he had a very successful run as head of DCG for almost a decade."

"This rapid-fire exodus of key executives does not fill us with confidence on the near-term," added Rasgon, who remains Underperform rated on Intel's stock with a $26 target price.