Grove ends reign at Intel

Andy Grove ended his 11-year reign as chief executive of Intel today, handing over the CEO title to company president and chief operating officer Craig Barrett.

Although Barrett had been groomed as heir apparent for more than a year, the timing of today's transition came as a surprise. The 61-year-old Grove will remain as chairman of the company, but no successor to Barrett as chief operating officer has been named.

Barrett, 58, is known as a skilled operations executive but faces an industry far different from the one navigated by Grove over the last decade. He will have to shape Intel into a company that can cope with lower margins and the irreversible trend toward low-cost computers.

"I have thoroughly enjoyed being Intel's CEO for the past 11 years, and now I would like to focus more of my time on broad strategic issues," Grove said in a statement. "Craig and I have had a long working relationship, and I look forward to a smooth transition of our roles as I continue my work as chairman."

Intel has seen amazing success during Grove's tenure as chief executive: In the 1990s alone, its revenues have grown sevenfold and its stock has appreciated more than 1,600 percent. The company that has come to dominate the world's microprocessor market is worth an estimated $127.2 billion. (See related story)

But more than a successful enterprise, Intel has become a model for corporate America, melding big business with the entrepreneurial spirit that drives even the smallest start-ups of Silicon Valley. Grove, for example, has become famous for shunning the type of large office that has become standard for CEOs and opting instead for an eight- by nine-foot cubicle.

Personifying the culture of the firm he cofounded, Grove is perhaps best known for four words that sum up his business philosophy: Only the paranoid survive--also the title of his 1996 book. "I have no idea when I first said this, but the fact remains that, when it comes to business, I believe in the value of paranoia," he wrote. "...I believe that the prime responsibility of a manager is to guard constantly against other people's attacks and to inculcate this guardian attitude in the people under his or her management." (See related story)

A Hungarian immigrant, Grove participated in the founding of Intel in 1968. In 1979 he was named president, and in 1987 he became chief executive officer. Ten years later, Grove became Intel's chairman and was named Time magazine's "Man of the Year."

Questions about Grove's plans were raised a few years ago when he was diagnosed with prostate cancer. But Intel insisted today that this played no role in today's announcement.

The leadership transition becomes effective on May 20, after Intel's annual shareholders meeting. In his new role, Grove is expected to take on a more visionary role.

"Craig has been the architect of Intel's operations throughout the last decade. Our performance in

Intel CEO Andy Grove contrasts Asia-Pacific and U.S. IT workers

developing a superb set of products and meticulously ramping them into high-volume production has been the result of the exceptional organization and methodology he has put into place," Grove added.

David House, a former Intel executive who left the company a year ago to become CEO of Bay Networks (BAY), said there are some notable differences between Grove and Barrett.

"Everybody has to look at the contrast between these two guys. Andy is the most intelligent and articulate man I have ever met. He is insightful and articulates problems so clearly," said House, who worked at Intel for 22 years. "Craig, on the other hand, is an absolutely different person. Craig's real ability is to harness the brain power of a team. At the same time, he is very people-oriented and willing to make hard decisions that aren't very pleasant. Andy is more mercantile. He moves extremely quickly."

Barrett has no plans to move his primary office or residence to Silicon Valley from Phoenix, Arizona, Intel spokesman Adam Grossberg said. He added that business at company plants in Arizona demand much of Barrett's time and that the executive can handle the CEO spot no matter where he resides or works.

His focus, however, may have to change quickly for the chipmaking giant to keep pace with immediate changes taking place in the industry.

Barrett, who received a Ph.D in materials science from Stanford University, joined Intel in 1974 and was named a vice president in 1984. He was promoted to senior vice president in 1987 and became executive vice president in 1990. He was elected to the company's board in 1992 and was named chief operating officer a year later. He also became the fourth president of the 30 year-old company in 1997.

The board also announced today an increase in the stock repurchase program of 100 million additional shares, raising the number of shares available for buyback to 129.8 million.

Under prior stock buyback authorizations, the company has 29.8 million shares of stock remaining available for repurchase as of March 25, 1998.

As of March 25, Intel had the potential obligation to repurchase 14.8 million shares under outstanding put warrants. Since initiation of the program, Intel has repurchased 235.4 million shares.

(Intel is an investor in CNET: The Computer Network.)