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Friday, June 22, 2018

MF Intel CEO Resignation Raises More Questions

Recent news regarding about Intel Corp. CEO Brian Krzanich informed the public that BK resigned from his position, voluntarily. In view of of the company's record while under the tenure of BK, we believe that this "surprise" resignation was due to multiple factors and was a lot more predictable than not. The "fraternization" charges seem to be a PR solution that was devised to cover up for much more material misdeeds on the part of the beleaguered CEO.The swift way in which the event was announced and executed, indicates that Intel Corp. is doing its best to put maximum distance between BK and the company, more than likely because more serious revelation are about to see the light of day, very soon.
  • So far we know that multiple law suits have been filed against Intel Corp. as consequence of the multiple security flaws, found inside Intel's advanced microprocessor architecture that have been discovered by outside security experts. These law suits will have potentially detrimental effect on the company's revenue stream.
  • We know that the Federal Government is actively investigating Intel Corp. for illegal workforce manipulation and age discrimination charges. According to our sources, this investigation has been significantly expanded in recent months. The results of this investigation, which is already more than two and a half years along the way, are bound to be significant, both in terms of company image and monetary cost.
  • BK himself is facing investigation regarding his sale of millions worth of his stock options, while having first class access to propriety information, regrading the severity of security flaws in Intel Corp. microprocessor architecture and while being able to fully assess the corresponding risks to the company stock valuation.
  • The company's announcement that its 10nm manufacturing will not bear fruit until later in 2019, serves as a clear indication that something is awfully wrong with with the way that the company operates. Industry veterans, including myself, assess that the execution problems are not purely technical in nature, but rather have lot to do with chaos within the ranks, due to absence of leadership and expertise. Intel Corp. lost many highly experienced employees due to laying off about 1200 employees in 2015 and 12,000 in 2016, besides forcing thousands of veteran employees to retire. Apparently, the payroll savings in prior years are now costing a fortune in reduced productivity and chaos within the company ranks. To be fair, Intel Corp. annual reports, published over the last few years, stated the risks that such layoffs might bring about; however, management under the leadership of BK decided to take the risk, nevertheless!

It seems like the issue of fraternization, could have been handled with finesse, should BK's functional value in the eyes of the Board of Directors, was in order. The Intel Corp. PR machine could have come with subtle declarations and very little fanfare (like announcing a transition period for the CEO). Such was the case in the past when company executives were involved in quandary of various sorts. Typically, they were put to pasture (or sent to Siberia...) for a few months before quitting their job. Switching titles between President, President Emeritus, and CEO, was also common tactic to contain such moves. However, BK, more than any other Intel CEO before him, positioned himself at the center of a large number of PR campaigns and public personal appearances, in a self-promoting campaign that could only be described as a Trumpian Parade. Apparently, seeking the lime light came home to roost, when the Board finally decided to cut their losses with BK. Undoubtedly, the resignation came as a result of the mounting public scrutiny regarding company performance and dismal growth predictions, relative to the position of Intel's industry competitors. For the Board this is a matter of facts speaking for themselves and not of a sudden puritan morality campaign.

In spite of admitting to the shortsightedness and the missed opportunities in the smart phone ("mobile") market, switching to other sources of revenue to replace the PC market derived income, the company execution remained very slow. Instead of demonstrating true leadership by example, BK elected to run the company as a dictator, eject many of his coworkers whom he viewed as competitors and laid off tens of thousands of experienced employees from the company. Through the course of this process BK demolished the internal, productivity culture that was known until then as "Intel Culture".

Generally, Intel Corp. under the leadership of BK traveled through a process of organizational collapse ever since BK became CEO in 2013. The latest revelations about production line failures and inability to deliver 10nm high volume products, is a symptom of such organizational collapse. Intel Corp. rapidly lost it position as the world's leading semiconductor manufacturer to Samsung and its fledgling merchant Fab business never took off in a substantial way.

BK demonstrated significant lack of trust in in the company's human capital, particularly veteran company employees, a fact that is proven by the following points:
  • In his first year as CEO, BK blocked the publishing of the annual Organizational Health Survey (OHS), a survey in which employees provided their feedback about declared organizational goals and related management actions. This blocking of material information from employees, raised a lot of discontent among the rank and file within the company, since such a move has never happened before and clearly demonstrates a lack of transparency. BK never provided employees with an acceptable answer for his move.
  • BK drove the company to layoff tens of thousands of veteran employees and forced additional thousands of experienced employees to retire. No attempt was done to invest in employee retraining or reassignment. At the same time that Intel Corp. laid off a massive number of employees, the company also recruited an equal number of inexperienced new employees with foreign citizenship, many of them through H1B visa sponsorship and F1 to OPT conversions. This resulted in vacuum within the ranks, due to shortage of experienced leadership and a complete decimation of the "Intel Culture", a culture of taking responsibility, effective problem solving and operating with open communication and mutual trust. Newcomers, many of them recently arriving from countries that are not compatible with "Intel Culture", had no means to learn and follow by example, because the ranks were void of the older and experienced employees.
  • Due to his perceived notion about difficulties in managing the lower ranks, BK elected to invest tens of billions of dollars, into purchasing two outside companies, Altera and MobilEye for ridiculously overpriced valuations. The jury is yet to decide if these purchases were justified in any way; however, through this approach, BK's disdain to take charge and lead his own employees became apparent.
  • In 2015, BK declared the 1200 employees who were laid off by the company as "Lowest Performers". He did this in an open forum of employees, which created an enormous uproar inside the company. No attempt was made to correct the statement or apologize to the employees. Instead, Intel Corp. banned these employees from being rehired for their lifetime.
  • While trying his best to inflate his PR image, BK painted himself as a champion of female participation in the workforce. In January 2015 he announced that the company will spend $300 million on a new “diversity in technology” initiative. He also appointed his alleged girlfriend Danielle Brown, who was once his "technical Assistant" as the company "Chief Diversity Officer", a position that did not exist until then. Suspicious graft? You decide. Interestingly enough, the 1200 employees who were laid off in July 2015, received along with their "pink slip" a message from CEO BK, declaring that their layoff was called for due to the need to save $300 million, supposedly due to forecast of flat revenue. So it seems like BK was determined to promote his PR agenda by arbitrarily laying off veteran employees, and replace them with "diversity candidates". This would have been perhaps acceptable, besides that many of the women hired were foreign citizen spouses of H1B visa holder workers who stayed in the U.S. under H4 visas. So much to serving equality in diversification. According to the Economic Time of IndiaMore than 90% of such spouses are Indians. According to a recent report of the Migration Policy Institute, the US has issued EADs to more than 71,000 spouses of H1B visa holders, as of early 2017.
Workforce manipulation shenanigans and publicity stunts for hiding self serving nefarious agenda will remain the characteristics of Brian Krzanich career at Intel Corp., as well as his unique legacy of being the first Intel CEO to break Moor's Law. Though BK PR blurbs attempt to present the person as an "engineer" who runs a large technology company, people that knew BK at the beginning of his Intel career, told me that Brian had a very short stint in chemical engineering at the Albuquerque Fab, after which he immediately became a manager. Most of his time at Intel, BK spent at promoting his career, managing people and organizations and NOT doing actual "engineering" work. This could explain, at least in part, why real engineering and organizational problems are plaguing Intel Corp. as of late, since the CEO was probably not being able to understand what was broken in the system and what was necessary to fix it, while his personality prevented him from seeking good advice from either inside or outside the company.

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