Otellini Forgets He's CEO, Thinks He's An Economist
CEO's of public corporations have an obligation to report financials as required by the SEC, but since when was it a good idea for a CEO to forget they're the head of a public company and volunteer statements that pile on the gloom and doom. Any experienced CEO knows there's no such thing as "off the record" as far as press and analysts are concerned. And Paul, when did you become a expert economist and authority on GDP and unemployment?
Not surprisingly Intel's stock got slammed to the $13's afterwards.
Its unclear what Paul was trying to accomplish but he cost Intel shareholders a lot of money. He should lose bonus comp for such a novice mistake.
"If you think the recession is bad now, says the Intel (INTC) chief, a year from now will be worse. “This is the deepest one I’ve seen in my lifetime. All the smart people that I talk to tell us the U.S. is in for a two-to-three quarter recession,” Otellini said. “Unemployment peaks lag GDP. We’ll see much larger unemployment a year from now.”
If Otellini wanted to make a comment about the economic climate he could have said Intel is fully aware of what's happening in the global economy then highlighted steps Intel were taking to deal with it - then shut up.
The comment "if you think the recession is bad now, a year from now will be worse", did nothing to clarify how Intel was prepared for the future.
Apparently Intel's own staff may have had some concern on Otellini's remarks as the very next day Forbes ran a piece with Maloney delivering exactly the message Otellini should have said.
Everyone is already aware of the economic climate that exists and there's no media coverage of the topic. While Otellini is qualified to speak knowledgably about demand for semiconductors from data they get from their customers - which by the way is something Intel could do in revised forward guidance - he is not qualified to predict the future economy or unemployment and should know better than to be make public statements on topics beyond his area of expertise.
For instance, he does not know what stimulus programs and other measures that may be enacted this quarter or next year, by U.S. or leaders of foreign governments that could alleviate some of the economy's challenges and his predictions may not come true.
The point is, Otellini should leave the GDP and employment forecasting business to people who are qualified and focus on representing Intel's stakeholder interest to the best of his ability.