Intel’s turnaround falters

One mega pay-package smackdown to start: A Delaware judge rejected Elon Musk’s record-breaking $56bn pay package for the second time.

In today’s newsletter:

• Intel’s chief quits with chipmaker in crisis

• 9fin raises $50mn in fresh investment round

• Fewer people want a CFA certificate

If Pat Gelsinger couldn’t revive Intel, can anyone?

In 2021, when Pat Gelsinger was named chief executive of Intel, he was under no illusion that the job of turning around the architect of the modern technology industry would be easy.

The chipmaker at the time was fending off criticism from activist shareholder Daniel Loeb of Third Point, who had broadcast what many in the tech sector had long known. The chipmaker, vital to the rise of Silicon Valley, had ceded its leading position in the industry, falling behind more nimble rivals such as Nvidia and AMD.

To make matters worse, key customers including Apple were beginning to design their own chips for smartphones and personal computers.

But Gelsinger, a veteran Intel engineer who had overseen enormous financial returns as head of cloud infrastructure group VMware, came with big support. Loeb even said Third Point would make a long-term bet on his turnaround push.

Less than four years later, Intel has called time on Gelsinger’s transformation plan and former backers such as Loeb are long gone.

Gelsinger failed to halt Intel’s slide into turmoil. Once the world’s most valuable chipmaker, the company has lost almost half its value in 2024. Nvidia, on the other hand, has cornered the market for cutting-edge artificial intelligence chips, and its market cap has reached $3.35tn.

Gelsinger had laid out a five-year plan to turn Intel into a chip manufacturing powerhouse to rival Taiwan Semiconductor Manufacturing Company. But his vision struggled to attract customers.

Intel’s board also turned the heat on Gelsinger last year over concerns the company was falling behind in the race to design leading AI chips, as Nvidia pulled ahead and rival AMD positioned itself as the main challenger.

California-based Intel on Monday said the 63-year-old would be replaced by chief financial officer David Zinsner and executive vice-president Michelle Johnston Holthaus, who will be interim CEOs until a permanent appointment is made.

Frank Yeary, who was the independent chair of Intel’s board, will become interim executive chair.

The changes atop Intel will be closely followed by Wall Street and Washington. 

Qualcomm in September approached Intel about a potential takeover bid, though speculation about a mega-deal has cooled. Large private capital groups such as Brookfield and Apollo, meanwhile, committed billions to build Intel chipmaking plants in Arizona and Ireland as it reshores its supply chain from Asia.

Intel’s new leadership will have to decide whether the chipmaker needs to embrace more dramatic change, such as breaking up or selling assets including its majority stake in autonomous driving pioneer Mobileye.

Wall Street’s hot new Bloomberg data rival

Selling data about financial markets has historically been a very good business (see: Bloomberg).

Enter 9fin, a start-up co-founded by a former JPMorgan banker and credit investor Steven Hunter in order to provide data on debt markets.

From its inception in 2016, 9fin has grown to nearly 250 employees, the majority in London and Belfast.

While it is a competitive field, 9fin has built a business with roots in providing information on traditional high-yield and distressed debt — and now it sees room for further expansion amid the growth in private credit and asset-backed lending.

The fast-growing company on Monday said it had raised $50mn led by the growth investor Highland Europe, taking the total amount it has raised to nearly $90mn since inception.

Although the new funding will mainly be used to expand its engineering and technology in the US, 9fin also employs journalists, lawyers and financial analysts to break news and provide analysis on credit deals and market trends.

The company is going up against the likes of Fitch and Debtwire, but Hunter is banking on a new giant to emerge. “There is at least a billion-dollar revenue business to be built in this space,” he told DD’s Sujeet Indap and Ivan Levingston.

To win the deal the investment group Highland Europe beat out the likes of KKR, Carlyle and Mubadala, which also expressed interest during a fundraising process that included the company seeking about a $500mn valuation based on current annual recurring revenue of roughly $25mn.

9fin’s name stems from a website domain that Hunter already owned, and the number of letters in the word “leveraged”.

While the company does not expect to be cash flow positive until next year, Hunter said it was able to justify charging high prices — some debt information providers sell their products for more than $100,000 a year per user — based on its value to dealmakers.

“Think about how much a deal fee you make on a transaction,” he said. “Do you think 9fin will help you win one more deal in the next decade? If the answer to that question is yes, the return on investment versus a licence cost is just crazy.”

The CFA’s slow decline on Wall Street

It has been dubbed one of Wall Street’s toughest tests, the chartered financial analyst examination. The CFA has three phases and it can take years to complete all of them. Less than half of the candidates pass all the levels.

But the exam, tailored for portfolio managers, has become a bit of a relic on a Wall Street that is now dominated by private equity buyout artists, their throngs of private credit financiers and passive index funds, versus CFA-credentialed stockpickers.

Lending money to unprofitable companies based on their “recurring revenues”, one of the big growth areas of modern day Wall Street, after all, is probably not a CFA-approved financing technique.

Over the past five years the number of applicants taking this rigorous test, covering all aspects of investment analysis, has dropped by 40 per cent.

Ask senior executives at investment banks or private capital groups whether the CFA is a “must have” and they may well shrug. But most agree that it provides invaluable training for younger employees — and is a nice thing to have.

Demand for the costly test had been soaring before the pandemic, with test-taking surging in Asia, primarily China. Strict and long-lasting lockdowns there plus intensifying geopolitical tensions between China and the US and Europe helped put a stop to that growth.

Margaret Franklin, the chief executive of the CFA Institute, told the FT there has been a paradigm shift.

Candidates can now focus on course areas other than general portfolio management, such as private markets and wealth management. You might even come across exam case studies involving cryptocurrencies.

Even if the CFA’s voluminous study pamphlets are losing relevance, there is one core Wall Street skill that the test highlights: The ability to endure long, painful stretches of misery under the guise of making more money. On that front, the CFA is timeless.

Job moves

• President-elect Donald Trump has nominated Warren Stephens, chief executive of investment bank Stephens Inc, as US ambassador to the UK.

• Blackstone has hired Adam Lane from Goldman Sachs to lead consultant relations. Chris Sullivan was promoted to head of sponsor coverage, and Farhad Karim has been appointed chief operating officer of private wealth.

• Kirkland has hired Matthew Bettinger and Seth Henslovitz for the firm’s real estate practice. Bettinger joins from Fried Frank and Henslovitz joins from Schulte Roth & Zabel.

• Freshfields has hired Melissa Hodgman as a partner in Washington. She joins from the Securities and Exchange Commission, her employer of 17 years.

• Nuveen Private Capital named Otto Donner head of Nordics Business Development. Donner joins from M&G Investments, where he was head of Nordics, sales and business development.

Smart reads

Chief curbed Carlos Tavares, the Portuguese chief executive of carmaker Stellantis, lost the support of his board of directors — and his job — this week. Clashes over electric vehicles and more drove the change, the Financial Times reports.

Burn book Elon Musk has a long list of enemies, from Bill Gates to Sam Altman and Jeff Bezos, writes The Wall Street Journal. He thinks his appointment to the Department of Government Efficiency, coined Doge, will lengthen it.

Legacy in limbo Joe Biden pledged more than $400bn in federal support through the passage of the Inflation Reduction Act and the Chips and Sciences Act, the FT reports. Donald Trump has vowed to dismantle it.

News round-up

OpenAI explores advertising as its steps up revenue drive (FT)

EQT and GIC but into UK’s Calisen at £4bn valuation (FT)

The mother of all bubbles (FT)

US hits China’s chip industry with new export controls (FT)

How the car industry is exposed to Donald Trump’s tariffs (FT)