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Intel reorganizes business units, executives

The chipmaker will merge its networking and communications divisions and is shifting its upper management in a way that may heat up speculation over CEO Craig Barrett's successor.

Intel will merge its networking and communications divisions and has shifted its top-level management in a way that will likely heat up speculation over who might eventually succeed CEO Craig Barrett.

The Santa Clara, Calif.-based chipmaker announced Wednesday it will combine its Network Communications Group, which designs processors for telecommunications equipment, with its Communications Product Group, which makes servers and networking equipment, into a single business unit.

The combined division will be headed by Sean Maloney, an Intel executive vice president and until today the worldwide director of sales and marketing. Maloney has often been mentioned as a possible successor to Barrett. The promotion will give him a chance to expand his managerial resume and, effectively, enhance his chances for the top spot.

Another executive to watch in the future is Mike Splinter, Intel's executive vice president in charge of manufacturing, who received a similar promotion. He'll move from manufacturing to take over Maloney's job.

Despite a recent downturn, the networking products division was one of Intel's fastest-growing segments in the past year. A number of the company's acquisitions have been merged into the group.

Although Intel does not break out revenue for the division, annual sales are well over $1 billion, according to Mark Christensen, who had headed the group. Christensen and John Miner, who had managed the communications group, will work for Maloney.

Merging the two groups will likely allow Intel to report revenue for the division separately. For the past year, financial analysts have been unable to accurately gauge the division's growth because revenue and profit are lumped into the "other" category, which also includes revenue from services.

Intel executives said recently that the company is considering reporting the revenue separately to better highlight the division.

With the divisional merger, Intel will have four product divisions: the combined Communications Group; the Intel Architecture Group, which makes PC chips; the Wireless Communications and Computing Group; and the New Business Group, which focuses on services.

The company also announced a number of managerial changes. Gerry Parker, an executive vice president in charge of the New Business Group, will retire in May. Stephen Nachtsheim, director and vice president of Intel Capital, will retire in June.

Parker's retirement, combined with the promotion of Maloney and Splinter, will also likely change the speculation over who will eventually take over for Barrett. Barrett has said that five internal executives are in line to succeed him: Maloney, Splinter, Parker, Intel CFO Andy Bryant and Paul Otellini, general manager of the Intel Architecture Group.

With Parker out, the formal short list drops to four. The moves today seem calculated to a certain degree to give more opportunity to Maloney and Splinter. Historically, Intel has shifted rising executives in and out of different roles. Otellini, for instance, has held a variety of positions at the company, while Bryant heads Intel's e-commerce initiatives.

Unlike many Intel executives, Maloney's background is in software, not chip design. By being placed in charge of the Communications Group, Maloney will be able to demonstrate his abilities in running a chip division. Maloney also worked as Chairman Andy Grove's chief assistant during the Pentium bug debacle of the mid-1990s.

Similarly, by taking over sales, Splinter will have an opportunity to show what he can accomplish outside of manufacturing.

Barrett has said he has no immediate plans to retire.

Insight 64 analyst Nathan Brookwood said the moves go beyond Intel's typical executive shuffling. "What is interesting is that Splinter is a technology guy," he said. "Intel does like to move people around a bit, but this seems more than a bit.

"If something were to happen to Barrett today, Otellini would be the obvious choice," Brookwood added.

Among other changes, Robert Baker will replace Splinter as co-general manager of the Technology and Manufacturing Group.

Intel did not appoint an executive to take over the New Business Group. The division has been beset recently by setbacks. Intel shut down a Web hosting group and a media streaming service. Barrett also said that revenue for its online services division have been lower than expected.