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Sat, Nov 13, 2004 - Page 12 News List

Intel appoints Otellini as CEO

SUBTLE POLICY SHIFT Paul Otellini will be the first non-engineer to lead the company and is likely to be a kinder, more gentle leader than his last two predecessors

NY TIMES NEWS SERVICE , SAN FRANCISCO

Intel, the world's largest computer chip maker, announced on Thurs-day that its directors had confirmed the selection of the company president, Paul Otellini, as chief executive.

The promotion, which is to take effect on May 18, will mark a subtle shift at the top of Intel; Otellini, 54, who will be the first non-engineer to lead the company, promises to be a kinder, more gentle leader than his last two predecessors.

Intel also announced that Craig Barrett, the current chief executive, would take over in May as Intel chairman, a post now held by Andrew Grove. Grove, a prominent figure in Silicon Valley, will leave the board after 30 years, but he stressed in a phone interview that he was hardly retiring from the company where he has worked since shortly after it was founded in 1968.

"My plan is to be a noodge without portfolio," Grove said.

The choice of Otellini as Intel's fifth chief executive came as no surprise to those who pay close attention to Intel. In January 2002, Otellini was named president and chief operating officer, all but guaranteeing his promotion to the top spot.

"This has been something in the works for a long time, and it's been understood by the Street," said Adam Parker, an analyst at Sanford C. Bernstein & Co.

"Both are pretty disdainful of the Street, but on the margins, Otellini is more of a business guy, and Barrett is very much of a technology guy, and so I expect Otellini will be a shade more shareholder-friendly moving forward," Parker said.

Yet Otellini is best known internally for initiating what insiders refer to as the "right-hand turn" -- a departure from the belief among its engineers that their priority was always the development of ever faster, more powerful microprocessors.

Otellini, starting in 2000, was able to convince the company's top leaders that customers care less about incremental advances in speed and power than about the availability of built-in features like wireless connectivity to the Internet, security measures and richer audio.

Otellini accomplished that objective, said Andy Bryant, Intel's chief financial officer, with a deftness missing in his predecessors. Intel is renowned for the raucous way its executives thrash out disagreements; Otellini stands out as more soft-spoken.

"Paul can be the coach and cheerleader," Bryant said. "He can build the consensus. That's his natural style, though I've also seen him say, `I'm the boss, here's the answer.'"

Otellini will need those skills -- and more -- as he prepares to take over a company struggling to excel in a post-PC world in which a proliferation of hand-held gadgets for consumers, like mobile phones, cameras and music players, are driving business. The company's foray into the wireless communications market has so far failed to contribute profitably to the bottom line, and last month the company abruptly canceled an effort to enter the market for building chips for television sets.

When directors informed him of their decision on Wednesday evening, "at first I felt in awe, and then I was very excited," Otellini said. "This is one of the great companies of the world, and for me having that mixture was an interesting reaction."

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