Why is Renee James leaving Intel?

She could be "pursuing other opportunities," but there is likely another explanation

Renee James

Renee James is pictured giving a keynote address at Oracle OpenWorld in 2014.

Credit: flickr/Oracle PR

There were some fireworks at Intel in advance of the Fourth of July as several Intel executives left the company in a pretty big shakeup by Intel standards.

The biggest departure is Renee James, president of the company and head of the software group, who said she was leaving to pursue an "external CEO role." James will remain with the company until January to help in the transition.

James was the face of Intel's diversity efforts. Earlier this year, Intel announced plans to spend $300 million in training and recruiting female and other groups of under-represented computer scientists and James would spearhead the effort.

So I’m not completely buying that "pursue CEO opportunities" line. For starters, most executives don't operate like that. They keep their plans quiet. Plus, James was first in line for the top job at one of the leading Silicon Valley companies in case Krzanich either stumbles or there is an unfortunate event.

But according to Citibank research analyst Christopher Danely, James wasn't doing all that well at her main job. He called her departure a positive, "due to the lack of growth and low profitability of its software business under the leadership of James."

Danely also said he believed James was largely responsible for leading Intel’s $7.7 billion acquisition of McAfee in 2011, a merger that made absolutely no sense to anyone but a McAfee shareholder. He added that Intel's software business had grown just 2.5% CAGR in the last three years.

"The McAfee deal has been a major disappointment in our view as there are virtually no synergies between Intel’s core silicon business and McAfee security software. When Intel acquired the McAfee business it generated 2010 revenue of $2.1 billion with operating margins of roughly 11%. We estimate McAfee revenues have remained roughly flat since the company was acquired, while operating margins have declined to the mid-single digit range," Danely wrote.

When you say "software," Intel is hardly the first company that comes to mind. It makes chips, first and last and always. It has some compiler technology, which is said to be quite good, but really, you just don't think of software as a big part of Intel. That's why the McAfee purchase made absolutely no sense. But Otellini was CEO and he and the board of directors approved it.

So did James take the fall for the waste of money on McAfee and underperforming software group? Maybe. But we might do well to look at James’s departure in the context of being one of the recent departures at a company known for its stability.

Hermann Eul, corporate vice president and general manager of the Mobile and Communications Group, will depart after only four years with the company. He came on board as part of the Infineon acquisition. And Mike Bell, corporate vice president and general manager of the New Devices Group, will retire later this year. He was also a short-timer, coming from Palm in 2010. He had been heading up Intel's Internet of Things group, so this one has to hurt.

And then there’s the diversity thing…

James was one of the leaders of Silicon Valley's diversity push. If she’s really bailing out on that to look for a better job, that doesn’t send a great message to those who would follow in her footsteps.

Women executives overall are not having a good summer. James is out of Intel, Ginni Rometty is having a very hard time at the helm of IBM, Lisa Su is having a rough ride at AMD, Yahoo's Marissa Mayer has been beat up by the New York Times and other publications over some of her decisions, and Ellen Pao lost big in court in a discrimination case and just ran Reddit off a cliff. Right now it looks like Safra Catz and Sheryl Sandberg are carrying the hopes of female executives in the Valley on their own, and Catz is so low-profile I doubt she wants the burden.

So, yes, James’s departure is big but we should not sell short Eul or Bell’s departures either, when mobile and IoT are areas where Intel is struggling. Taken separately, we can theorize that James took the fall for poor performance in her group. But as a whole, this is a major shakeup at Intel in all the areas that are struggling, so perhaps Krzanich cleaned house ahead of a poor quarter.

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