On November 21, 2013, Intel hosted its annual Investor Meeting in Santa Clara, CA. Intel is the leading manufacturer of CPUs for PC computers, so anyone with an interest in the PC computing business should review any information from the event made available to the public.
Brian M. Kzranich, the CEO of Intel, opened the meeting with a 40 minute presentation. As Tiernan Ray notes in an article published on the Barrons website, It’s Too Soon to Bet On Intel’s Strategy, Mr. Kzranich’s talk was ” . . . a sharp departure from the expansive attitudes of [Paul] Otellini [Mr. Kzranich’s predecessor] and his predecessor[, Craig Barrett], who both steered Intel into new markets. . . . In [Mr. Kzarnich’s hands], the playbook appears to be back to basics, emphasizing how Intel makes chips better than anyone else in the world.”
In the course of Mr. Kzarnich’s remarks, he does point to a substantially slower rate of decline for sales of PC computer chips, now clearly in the “single digits”. He refers to the condition of the overall PC market as “stabilizing”. But most of Mr. Kzranich’s presentation is about Intel’s plans to relentlessly pursue new growth opportunities, all the way from manufacturing PC Computer chips for OEMs marketing any kind of operating system — Android, Apple, Windows — to an aggressive effort to establish Intel as a major supplier of chips for tablet computing, and mobile telephony, and, finally, an openness to selling its foundry services to anyone interested in building the best computer chips available anywhere.
Mr. Kzarnich’s remarks are more about realigning Intel, as a business, around its core strengths, and less about a need to move beyond PC computing, as a market in a permanent state of attrition. On the contrary, he spoke about “[r]e-inventing the PC Experience”, while remarking on “convertibles” and “detachables”, as examples of “[i]nnovation in [PC f]orm [f]actors and [c]apabilities”. Finally, he touched on “[p]erceptual [c]omputing”, including the touchscreen technology Microsoft® has introduced with Windows 8, as a set of technologies capable of reviving consumer interest in PC computers.
But the first trading day following Mr. Kzarnich’s published remarks, and the rest of the Investors’ Day presentation, Friday, February 22, 2013, was not a good one for anyone with an investment in Intel. The stock dropped more than 5%. Analysts like Mr. Ray drilled down to how Mr. Kzarnich’s remarks represented a break from his predecessor, and signaled a decision to pull back from direct-to-consumer initiatives, including its set-top television box. I, myself, found it hard to tie all of the points Mr. Kzarnich made into a cohesive product marketing plan for the overall business.
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