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Greetings! These are heady days for Elon Musk, whose friendship with Donald Trump has accentuated his already immense power in the tech industry. But there’s one quarter where Musk can’t yet get what he wants: the Delaware courts. Late Monday afternoon, the Delaware judge hearing the long-running fight over Musk’s Tesla pay package reaffirmed her January ruling rescinding the package, which after Tesla’s recent rally is worth a whopping $101 billion. Tesla shareholders had reapproved the package in June, but, as we noted at the time, the judge could still block it—and she has. For more on the original decision, see here. In today’s decision, Judge Kathaleen McCormick said that the arguments put forward by Tesla went “against multiple strains of settled law.” Her reasoning was legalistic, based on procedural grounds and the timing of the argument. Tesla and Musk seem certain to appeal. And you can see Musk’s point. While the judge’s original ruling was based partly on the belief that shareholders weren’t sufficiently informed about Musk’s close ties to the Tesla board when they initially approved the pay package, no one could say that after the case went to court and all the details came out. Here’s a message for senior corporate executives out there: If a headhunter calls you in the next few days trying to ascertain your interest in running an icon of U.S. technological ingenuity, you might want to hang up the phone. The company they’re talking about is probably Intel. And taking its reins probably wouldn’t be good for your mental health—or your career. After all, if anyone seemed to be ideally suited for the job, it should have been Pat Gelsinger, the CEO since early 2021 who over the weekend was dumped by the board so abruptly that the chief financial officer and another executive were named as interim co-CEOs while it searches for a permanent replacement. Gelsinger had spent 30 years of his life at Intel before leaving in 2009, eventually becoming CEO of VMware, before his return. When he came back, he said being CEO was “my dream job.” We’ll skip the obvious nightmare joke. We don’t quite know what triggered the board’s decision, although Bloomberg reported that the board had “lost confidence” in Gelsinger’s turnaround plans. A more detailed answer might be found in this Reuters report from late October, which detailed Gelsinger’s missteps, including overhyping Intel’s progress in AI chips. More fundamentally, though, Intel’s financial performance worsened under Gelsinger, who was meant to be the turnaround person. Intel has projected it will finish this year with $52.6 billion in revenue, 32% lower than what it was in 2020, the year before he took over. More alarming, the amount of cash generated by Intel’s operations has shrunk from $35.4 billion in 2020 to $11.5 billion in 2023. Intel has suspended its dividend. Its stock has been cut in half since Gelsinger took over. The big question now is whether anyone can rescue Intel. The company has been declining for years, having missed the boat on mobile chips and more recently on AI chips. Would someone like Lou Gerstner, who helped lift IBM out of a depression in the early 1990s, be suitable? Gerstner wasn’t a techie—he had run RJR Nabisco before joining IBM and earlier was a senior executive at American Express. Still, IBM’s problems were not as existential as what confronts Intel now. One solution could be a sale of Intel. But that may be difficult given its sheer size—its market capitalization is around $100 billion. Qualcomm, the mobile chip giant, has reportedly lost interest, partly because of Intel’s size. It might be easier to bring in someone as CEO who breaks up Intel and sells off the pieces. Intel’s chair, Frank Yeary, is an investment banker who was today named “interim executive chair” during the management transition. His expertise should come in handy right about now. - The U.S. is restricting the sale to China of advanced memory chips that are crucial for artificial intelligence development, as part of its annual updates to export controls designed to prevent China from accessing cutting-edge semiconductor technology for military use (more here).
- Fidelity Investments marked up its equity stake in Elon Musk’s X by 32% in October, according to a recent investor filing. The markup follows several markdowns over the past couple of years, since the 2022 buyout of X, formerly known as Twitter.
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