Intel Slumps as Wall Street Scrutinizes New CEO Swan's Pedigree

(Bloomberg) -- Intel Corp.’s long-awaited choice of a new chief executive officer is getting a cold reception on Wall Street.

The chipmaker’s shares fell as much as 3 percent after the appointment of former chief financial officer Robert Swan surprised some analysts, who cited his lack of technology experience and Intel’s decision to hire from within the company.

Intel Slumps as Wall Street Scrutinizes New CEO Swan's Pedigree

Here’s what analysts are saying.

Raymond James, Chris Caso

Swan is “unusual” for an Intel CEO “in that he doesn’t have a technical background.”

“Swan has a background as a cost cutter, so this will be perceived to be positive from a cost perspective. But as an existing member of the team who will need to rely on existing senior management for a technical and market view, this may result in less radical strategic change as compared to if an outsider had been hired.”

Rates underperform.

MKM Partners, Ruben Roy

Given Intel’s “recent manufacturing issues, we had expected the company to perhaps more strongly consider a candidate with a technology and architecture background.”

“We expect Mr. Swan to continue to focus on increasing INTC’s exposure to data-centric markets which have seen a revenue mix that has shifted from 70%/30% PC-centric several years ago to roughly 50%/50% today.”

Rates buy, $58 price target.

Mizuho, Vijay Rakesh

“Investor push back given the negative stock reaction stems from the lack of a technologist leading a premier global technology company.”

The initial reaction is that this decision could open up a window for rival Advanced Micro Devices Inc. to be more competitive in servers and GPU technology.

Rates buy, $56 price target.

Bloomberg Intelligence, Anand Srinivasan

The move “signals the rising financial focus of the company, and while this aids margin, capex and cash flow, investors may question the choice.”

“Swan is Intel’s first non-engineering or manufacturing leader, and it’s an unconventional choice for Intel to advance its competitive edge against TSMC and Samsung and yet deliver Moore’s Law breakthroughs.”

Wells Fargo, Aaron Rakers

“We think many investors were hoping Intel would name an outside CEO -- believing this would increase the possibility of some more active/aggressive transformational moves within the company.”

Investors are also probably questioning the view that Intel would not pursue an acquisition of Mellanox without a permanent CEO.

Rates outperform, $55 price target.

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