One Struggling CEO Leaves One Struggling Company: Gelsinger and Intel
Intel and Stellantis are two companies that have been in a perpetual state of struggle for a while. Stellantis has struggled for as long as it has existed, about four years, while Intel has struggled for the past ten years, in particular, since Gelsinger took over in 2021. Today, we will review these two companies, their struggles, future, and if either of these companies will ever have a chance of making it into the vaunted, prestigious Pax Romana Capital LLC /Henry “money-maker” Beall portfolio.
First, we’ll start with Intel. In 2021, Pat Gelsinger was hired. We will call him Pat for the rest of this article because I do not want to write Gelsinger 40 times. Anyway, Patty was an odd figure. He got his start at the company in the 80s, but he left in 2009 for greener pastures. Then, he returned in 2021 to reshape this company in a modern, professional image, a task he has sadly failed at entirely. Intel has lost 60% of its value since his first day on the job, while the S&P 500 has risen by 53% over the same period, which is really bad, to say the least. The timing of this firing is weird, too.
Pat’s plan for Intel centered around creating their own foundry and manufacturing capabilities, which they just reached. In doing this, Pat/Intel destroyed their valuable relationship with Taiwan Semiconductor, which definitely hurt a lot, but it would not matter very much if they could make their own chips, which they just got the ability to do after years of planning and pain from Pat and Intel. Now, after this whole very painful, unbelievably costly process, they’re firing the guy who started it all, which raises the question, did they just go through four years of intense turmoil and pain for nothing? Is this roadmap just useless now?
This does not mean by the way that Intel will be all fixed once Pat’s replacement comes in and presumably undoes most of his work. Intel is in a deep, deep hole right now, losing market share on every front to every competitor, missing out on innovation, and watching their bill to keep up increase. For example, Intel’s data center GPU chip missed on its $500 million revenue target while Nvidia’s data center GPU reached $83 billion in revenue for this fiscal year.
The only thing keeping Intel truly afloat right now is the US Government. The US really wants chip-manufacturing capabilities inside the country, and Intel is the only real American option, but the very lucrative US contracts that Intel continues to pick up on also prevent them from selling to a non-US group, which again is tough because there are no internal companies that could feasibly buy any of Intel’s operations without some watchdogs from the American government getting in the way.
Intel is not a buy right now. I did not like Pat, and I did not think he was the man for the job, but this move throws the company into far more tumult than it protects them from. When Intel goes out and hires some person making big promises about fixing the company through bold moves, ignore them. This company cannot be fixed by one person, and it would be wildly optimistic to think that this company can return to any semblance of growth within the next decade, let alone the next CEO.
