Brian Krzanich was ousted as chief executive of chip-making giant Intel (INTC) following an investigation into a "consensual relationship with an Intel employee," the company said Thursday.
Intel shares are down 2.3%, to $52.24, in trading today.
"An ongoing investigation by internal and external counsel has confirmed a violation of Intel's non-fraternization policy, which applies to all managers," Intel said in a statement. "Given the expectation that all employees will respect Intel's values and adhere to the company's code of conduct, the Board has accepted Mr. Krzanich's resignation."
Chief Financial Officer Robert Swan has taken over as interim CEO while the company's board searches for a permanent replacement immediately, the company said. Krzanich also left Intel's board.
Intel on Thursday also raised guidance for its second fiscal quarter to adjusted earnings of 99 cents per share on revenue of $16.9 billion. The Silicon Valley company previously forecast Q2 earnings of 85 cents a share on $16.3 billion in revenue.
Yet the departure of Krzanich, 58, concerns Mizuho semiconductors analyst Vijay Rakesh, who cites Krzanich's "strong manufacturing background" and a "gap at the top." Intel also faces intensifying competition from Nvidia (NVDA) and Advanced Micro Devices (AMD). Still, Rakesh maintains a "Buy" on Intel shares and a $60 price target.
Intel shares soared 120% during Krzanich's five-year tenure as CEO.
BK, as Krzanich is nicknamed inside Intel, joined the company in 1982 and cut his teeth in engineering. The guts of a product - not the prestige of his title - is what motivates him. "We work out a story line where we give people a view of the future" that is also practical in their lives, Krzanich said in a 2015 interview with this reporter.
It was during the same interview that Krzanich vowed to increase the diversity of Intel's U.S. workforce by 2020. The company pledged $300 million to fund the hiring and retention of women and underrepresented minorities, the largest investment in diversity then by a technology company.
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