VMware’s Gelsinger on Intel CEO Radar to Succeed Otellini?

VMware CEO Pat Gelsinger may be on Intel’s short list to succeed retiring CEO Paul Otellini, according to a report.

DH Kass, Senior Contributing Blogger

March 11, 2013

4 Min Read
VMware’s Gelsinger on Intel CEO Radar to Succeed Otellini?

VMware (NYSE: VMW) CEO Pat Gelsinger may be on Intel’s (NASDAQ: INTC) short list to succeed retiring head Paul Otellini, according to a report in Atlantic Media’s online business news site Quartz. The report, which cites “people familiar with the matter,” (the new euphemism for sources said), also names former Motorola chief Sanjay Jha as a prime candidate to take Intel’s helm following Otellini’s planned departure in May.

The significance of the buzz is that, if accurate, it signals Intel’s widening horizon to find a suitable successor to Otellini, who began his career at the chip maker in 1974, ascending to the top slot in 2005 as only the fifth chief executive in the company’s storied 45-year history. Intel has never gone outside its ranks to hire for its top slot. Other candidates from within and outside the company also are under consideration for the job, according to the Quartz report. Intel has said that it prefers to have Otellini’s successor ready to go for its May 16 shareholder meeting.

As for Gelsinger, officially VMware’s chief only since September 2012, his 30-year tenure at Intel undoubtedly is responsible for his name being bandied about in the company’s chief executive search. At Intel, Gelsinger led the company’s largest business unit, the Digital Enterprise Group, and the Desktop Products Group, which handles desktop processors, chipsets and motherboards. He was the chip maker’s first chief technology officer (CTO), headed Intel Labs and is credited with architecting the original x486 processor.

While at Intel, Gelsinger was widely rumored to be the heir apparent to Otellini and was said to be a leading candidate to replace EMC (NYSE: EMC) chief Joe Tucci, who is slated to retire in 2015.

In Q4 2012, VMware’s first full quarter under Gelsinger’s stewardship, the company beat Wall Street estimates, posting $1.29 billion in revenue, up 22 percent from the same period last year, and net earnings of $206 million, or 47 cents per share, a slight increase from the $200 million and 46 cents per share it earned in the same quarter in 2011. For the full year, VMware recorded a 22 percent increase in revenue to $4.61 billion, closing with some $4.63 billion in cash on hand.

But a gloomy outlook for 2013—in particular for Q1–and a restructuring plan to cut 900 jobs prompted a subsequent 25 percent hammering of the stock downward from a high of $99 on Jan. 25 to its current level of $74.56 as of March 8.

At VMware’s recent Partner Exchange 2013, Gelsinger pledged that the vendor will continue to innovate to stay ahead of rivals Microsoft (NASDAQ: MSFT) Citrix Systems (NASDAQ: CTXS) and Red Hat (NYSE: RHT) in the virtualization market. He identified VMware’s three missions going forward as the software-defined data center, the hybrid cloud and end user computing.

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About the Author(s)

DH Kass

Senior Contributing Blogger, The VAR Guy

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