Intel CEO Pat Gelsinger is out
Intel CEO Pat Gelsinger delivers a speech at Taipei Nangang Exhibition Center during Computex 2024, in Taipei on June 4, 2024.
I-Hwa Cheng | AFP | Getty Images
Intel announced Monday that CEO Pat Gelsinger retired from the company effective Dec. 1, capping a tumultuous nearly four-year tenure at what was once America’s leading semiconductor company but which saw its stock price and market share collapse in that time.
Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs. Longtime board member Frank Yeary will serve as Intel’s interim executive chair. Shares of Intel were up nearly 4% Monday morning.
“We are working to create a leaner, simpler, more agile Intel,” said Yeary.
Yeary, Intel’s longest-serving board member, will now have to preside over yet another CEO search process. Gelsinger, 63, had an illustrious career at Intel, rising to become the company’s first chief technical officer at the turn of the century, before he took a senior role at EMC. Gelsinger returned to the company from VMware, where he was CEO, to stabilize Intel in 2021, replacing then-CEO Bob Swan.
“It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics,” Gelsinger said in a press release.
Gelsinger set out an audacious plan when he arrived in 2021 to transform the languishing company into a chipmaking juggernaut. He sought to achieve parity with the two leading chipmakers, Samsung and Taiwan Semiconductor Manufacturing Company. He pursued big buildouts in the U.S. and around the world, a costly endeavor that weighed heavily on Intel’s free cash flow and increased the company’s debt load.
He also wooed government investment, positioning Intel as the single largest beneficiary of the U.S. Chips and Science Act. Government money has begun to flow to Intel in recent weeks and will aid the company’s chip fabs in Arizona and Ohio. Gelsinger’s retirement comes a week after Intel and the CHIPS and Science Act office finalized a $7.86 billion grant.
Gelsinger also moved to position the company as vital to U.S. national security. He won a multi-billion dollar contract with the Department of Defense to build secure chips, and in meetings with analysts and prospective customers stressed that Intel was a trusted partner to the U.S. government.
But all that was not enough to assuage investors, who increasingly began to see Intel’s aggressive spending as a folly.
Troubled tenure
US President Joe Biden holds a wafer of chips as he tours the Intel Ocotillo Campus in Chandler, Arizona, on March 20, 2024.
Brendan Smialowski | AFP | Getty Images
Investors became increasingly leery of Intel’s prospects, especially as the AI wave buoyed rival Nvidia and left Intel in the dust. The company’s market cap is less than half of what it was in 2021, and briefly crossed beneath $100 billion earlier this year. The company’s stock has fallen 52% year-to-date.
In August, Intel reported disappointing quarterly results, sparking the sharpest sell-off in 50 years, and said it would lay off more than 15% of its workforce as part of a $10 billion cost-reduction plan. CNBC reported that Intel had engaged advisors to defend itself against activist investors.
There is no indication yet that an activist has taken a sizable position in the company’s stock, nor any sign that overtures have been made to Intel’s board. It isn’t clear what agenda an activist would pursue at the company.
Intel revealed plans in September to turn the company’s foundry business into an independent subsidiary, a move that would enable outside funding options. That same month, Qualcomm made overtures about a possible takeover.
Gelsinger’s replacement, whenever found, will assume command of a company that is smaller and more challenged than ever before. Many of the problems Gelsinger faced were inherited: to not pursue a chipmaking mandate for Apple’s mobile devices and passing on the acquisition of Nvidia were just two of the reportedly conscious decisions that Intel’s prior leadership made that left the company at a competitive disadvantage.
Those decisions were made by Intel’s board and past CEOs. But Gelsinger’s weekend ouster raises fresh questions about the company’s governance. Lip-Bu Tan stepped off Intel’s board earlier this year, leaving the company without any directors who had semiconductor expertise. Numerous reports have emerged in the weeks since detailing a dysfunctional corporate acquisition strategy and boardroom rancor.
— CNBC’s Jordan Novet contributed reporting.
File photo of Todd McKinnon, chief executive officer of Okta Inc.
Bloomberg | Bloomberg | Getty Images
Shares of Okta popped more than 18% in extended trading Tuesday after the identity management company released third-quarter results that beat analysts’ estimates and offered rosy guidance.
Here’s how the company did:
- Earnings per share: 67 cents adjusted vs. 58 cents expected by LSEG
- Revenue: $665 million vs. $650 million expected by LSEG
Okta helps companies manage employees’ access to applications or devices with features such as single sign-on and multifactor authentication. The company swung to profitability, reporting net income of $16 million, or 9 cents per share, during the quarter, compared with a net loss of $81 million, or 49 cents per share, in the same period last year.
Revenue increased 14% from $569 million a year ago, according to a release. The company reported $651 million in subscription revenue for the quarter, beating the $635 million average analyst estimate, according to Street Account.
“Our solid Q3 results were underpinned by continued strong profitability and cash flow,” Okta CEO Todd McKinnon said in a statement. “The focused investments we’ve made in our partner ecosystem, the public sector vertical, and large customers are materializing in our business with each of these areas contributing meaningfully to top-line growth.”
For the fourth quarter, Okta said it expects to report revenue between $667 million and $669 million, topping the $651 million average estimate, according to LSEG. The company expects to report earnings of 73 cents to 74 cents per share for the period, which also exceeded estimates.
Prior to the close, Okta shares were down 10% for the year, while the Nasdaq is up 30% over that stretch.
Okta will host its quarterly call with investors at 5 p.m. ET.
Marc Benioff, chief executive officer of Salesforce, speaks during the World Economic Forum in Davos, Switzerland, Jan. 18, 2024.
Halil Sagirkaya | Anadolu | Getty Images
Salesforce shares were up 9% on Tuesday after the company’s fiscal third-quarter earnings report showed revenue and fiscal fourth-quarter guidance that exceeded analysts’ expectations.
Here’s how the company did compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $2.41 adjusted vs. $2.44 expected
- Revenue: $9.44 billion vs. $9.34 billion expected
The company’s revenue grew 8% year over year during the fiscal third quarter, which ended Oct. 31. Its net income was $1.5 billion in the quarter, up 25% from $1.2 billion a year ago.
Salesforce said it is expecting fiscal fourth-quarter sales of between $9.90 billion and $10.10 billion. Analysts were projecting $10.05 billion in fourth-quarter sales.
The company said it expects earnings per share of between $2.57 and $2.62 in the fourth quarter, compared with analysts’ expectations of $2.65.
Salesforce also raised the low end of its revenue guidance, expecting a range of $37.8 billion to $38 billion for its fiscal 2025. That’s up slightly from $37.7 billion to $38 billion previously. The new range puts the midpoint for Salesforce’s fiscal 2025 revenue guidance at $37.9 billion, ahead of analysts’ expectations of $37.86 billion.
“We delivered another quarter of exceptional financial performance across revenue, margin, cash flow, and cRPO,” Salesforce CEO Marc Benioff said in a statement. “Agentforce, our complete AI system for enterprises built into the Salesforce Platform, is at the heart of a groundbreaking transformation.”
In a call with analysts, Benioff boasted about Salesforce’s latest artificial intelligence push, including the company’s AI-powered chatbots dubbed Agentforce, which investors are closely monitoring for growth. Salesforce’s Agentforce product is an example of so-called AI agent technology. Several companies have said they believe that these advanced chatbots represent the next logical step from ChatGPT and other related tools powered by large language models.
“We’re delivering these incredible Agentforce capabilities as well,” Benioff said. “This is a bold leap in the future of work, where AI agents let humans unite to transform all of our customer interactions.”
Benioff also revealed that he ruptured his achilles tendon on a recent birthday scuba-diving trip to Fakarava, an atoll in French Polynesia. Benioff expressed disappointment that the hospital that treated him couldn’t schedule his follow-up appointments using AI agents.
“That is the message to our customers, which is how are you going to give some of your people a break, let them get back to their strategic work, let them focus on what really matters,” Benioff said.
The company in August announced that Amy Weaver would step down from her role as chief financial officer but remain in the position until the company appoints a successor, after which she will become an advisor. That same month, activist investor Starboard Value revealed that it boosted its position in Salesforce by roughly 40% in the second quarter following the firm issuing a letter earlier in the year saying that Salesforce was continuing to move “in the right direction” in regard to improving its profit margin.
Starboard Value released a presentation in October in which it noted that Salesforce “can continue to become more efficient and more profitable.”
Watch: Salesforce has been short-term overbought, says Bespoke’s Paul Hickey
Entrepreneur Brian Singerman (R) and Noelle Moseley arrive at the Tenth Breakthrough Prize Ceremony at the Academy Museum of Motion Pictures in Los Angeles, California, on April 13, 2024.
Etienne Laurent | Afp | Getty Images
Brian Singerman, one of the earliest employees of Peter Thiel’s Founders Fund, said on Tuesday that he’s stepping down as a general partner.
Singerman, who joined the firm 17 years ago and became a partner four years later, wrote in a post on X that he’s moving into the role of partner emeritus and will stay on as an “investor and strategic advisor.” Singerman is best known for supporting the firm’s investments in Elon Musk’s SpaceX and defense-tech companies like Anduril.
In exiting the partner ranks, Singerman leaves Founders Fund with three general partners: Thiel, Napoleon Ta and Trae Stephens.
Thiel helped launch Founders Fund in 2005 and has since turned it into one of the leading venture firms in the country, thanks to early bets on Facebook, SpaceX and Palantir, which he co-founded. Keith Rabois left the firm earlier this year and returned to Khosla Ventures, where he worked before joining Thiel.
“From its inception and still today, FF is the place where talented, unconventional thinkers are encouraged to follow their convictions and make world-changing bets,” Singerman wrote in his post.
It’s been a tough few years for the venture industry, with IPOs virtually drying up in late 2021 due, at the time, to rising inflation and interest rates. There have been signs of life of late, with a few companies indicating plans to go public next year, but the highest-valued private companies have yet to indicate when they’ll test out the market.
Bloomberg reported on Monday that SpaceX is considering a tender offer that would value the rocket company at $350 billion, up from $210 billion earlier this year.
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