Intel CEO's massive stock dump raises eyebrows

Intel CEO Brian Krzanich sold about half his stock months after he learned about critical flaws in billions of his co...

Posted: Jan 5, 2018 12:08 AM
Updated: Jan 5, 2018 12:08 AM

Intel CEO Brian Krzanich sold about half his stock months after he learned about critical flaws in billions of his company's microchips.

Krzanich now holds only the minimum number of shares he's required to own.

Intel says there's nothing to see here: Krzanich remains confident about the company's future, and his massive stock sale was unrelated to the security issue that sent shares down about 6% over the past two days.

"Brian's sale is unrelated," the company said in a statement. "It was made pursuant to a pre-arranged stock sale plan ... with an automated sale schedule. He continues to hold shares in-line with corporate guidelines."

Related or not, it doesn't exactly give investors the warm fuzzies about Intel's stock prospects.

"He's an engineer; he can do math," said Stacy Rasgon, an Intel analyst at Sanford Bernstein. "This is not an incredibly bullish statement regardless of the security stuff."

The funny thing is Intel seemed to be in the middle of a turnaround. The company had a wildly successful 2017. The stock soared 27% after a solid summer quarter. Analysts are bullish: More than half call Intel a "buy," and just one in eight holds a negative outlook for the stock.

Krzanich himself was optimistic in his year-end message to employees. He said 2017 would be a record year and 2018 would mark the year Intel put the slumping PC market in the rearview mirror, according to Intel spokeswoman Cara Walker.

Yet on October 30, just three days before Intel's stock reached its 2017 peak, Krzanich announced a plan to sell 245,000 of his own shares by November 29. That left him with just 250,000 -- the fewest he's allowed to hold under his contract with Intel.

Krzanich had been selling stock all year. Bit by bit, he sold shares 21 times during 2017, but his largest sale by far was his last, when he dumped $50 million worth of stock: $28 million in just-vested options plus $22 million worth of Intel shares he had previously owned.

CEOs sell stock for all kinds of reasons: diversification, liquidity, financing a big purchase. But that's a massive amount of stock that Krzanich dumped, and holding the minimum isn't a great look.

"In all the years I've been at this and of all the companies I've covered, I can't recall another single massive sale on this scale," Rasgon said.

Krzanich sold stock 18 times in 2016, but none of those sales approached the size of his 2017 year-end cash-out. He ended 2016 with 18,000 more shares than he started.

The timing of the November sale doesn't look great either.

Related: Update your software today. Seriously.

Intel's Walker confirmed that security analysts informed the company in June of the security holes in its PC and phone microchips. (Intel made the public aware on Wednesday.) It's not clear how severe the problem will ultimately be for Intel -- it may have to pay to replace some customers' chips, but that's far from certain.

Walker says the company doesn't expect the security flaw will cost a lot of money to fix, and it is already taking steps to solve the problem.

But the CEO's stock sale still violates rule No. 1 for CEOs: Don't do anything that gives you front-page headlines for the wrong reasons.

Huntsville/Redstone
Clear
52° wxIcon
Hi: 66° Lo: 51°
Feels Like: 52°
Muscle Shoals
Clear
52° wxIcon
Hi: 67° Lo: 47°
Feels Like: 52°
Huntsville/Madison
Clear
52° wxIcon
Hi: 65° Lo: 49°
Feels Like: 52°
Decatur
Clear
53° wxIcon
Hi: 66° Lo: 51°
Feels Like: 53°
Fort Payne
Clear
57° wxIcon
Hi: 65° Lo: 53°
Feels Like: 57°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Cases: 443009

Reported Deaths: 6662
CountyCasesDeaths
Jefferson649101007
Mobile31746574
Madison28413217
Tuscaloosa21566275
Montgomery20088332
Shelby19452132
Baldwin17333189
Lee13261107
Morgan12678142
Etowah12141181
Calhoun11555206
Marshall10487123
Houston9031164
Limestone838181
Cullman8296124
Elmore8243110
Lauderdale7946107
DeKalb7900107
St. Clair7876130
Talladega6523112
Walker6050183
Jackson603245
Colbert558194
Blount548586
Autauga540762
Coffee466964
Dale412785
Franklin377550
Russell358415
Chilton346873
Covington340880
Escambia339244
Tallapoosa3163109
Dallas313696
Chambers305470
Clarke303336
Pike265231
Lawrence255855
Marion254661
Winston234742
Bibb222948
Geneva213047
Marengo210531
Pickens200431
Hale186144
Barbour183438
Fayette178829
Butler174860
Cherokee166031
Henry160025
Monroe152621
Randolph146636
Washington142727
Clay130746
Crenshaw124845
Macon122837
Cleburne122125
Lamar120622
Lowndes116836
Wilcox108322
Bullock104628
Perry100518
Conecuh98022
Sumter90627
Greene77923
Coosa64018
Choctaw52124
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Cases: 710427

Reported Deaths: 8970
CountyCasesDeaths
Shelby790251186
Davidson73248697
Knox40335452
Hamilton35983347
Rutherford34271298
Unassigned23946140
Williamson22259150
Sumner18862237
Out of TN1644883
Montgomery15200153
Wilson14878167
Sullivan13002221
Blount12382136
Washington12206206
Maury11337131
Bradley11263101
Sevier10877123
Putnam10200152
Madison9364186
Robertson793088
Hamblen7261119
Anderson7031116
Greene6779117
Tipton639571
Coffee578584
Gibson5767117
Dickson559082
Cumberland556777
Bedford546092
Roane536083
McMinn524674
Lawrence524369
Carter5215121
Warren511656
Loudon510352
Jefferson497078
Dyer487487
Monroe471964
Hawkins461473
Franklin426067
Fayette415953
Obion406683
Rhea391858
Lincoln388347
Cocke359063
Marshall358140
Cheatham350332
Weakley345948
Campbell338742
Henderson338659
Giles334476
Carroll318362
White317749
Hardeman315854
Hardin306650
Lauderdale299934
Macon294751
Wayne270325
Henry269960
Overton260546
McNairy249042
DeKalb247443
Haywood245650
Marion236233
Smith235430
Trousdale230617
Scott230432
Claiborne230033
Hickman229836
Fentress217835
Grainger217240
Johnson205335
Morgan196616
Crockett183738
Chester179039
Bledsoe178211
Unicoi170147
Cannon161721
Lake158522
Polk150517
Decatur149027
Union145725
Grundy143622
Sequatchie142120
Humphreys137717
Benton134135
Lewis131121
Meigs119216
Stewart112220
Jackson106624
Clay96526
Perry96325
Houston95226
Moore8319
Pickett69220
Van Buren6758
Hancock4227

Community Events