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Pushing Netbooks, Intel's Still Innovating

SANTA CLARA, Calif. ( TheStreet) -- From orchestrating layoffs to sniffing new netbook ventures, Intel (INTC - Get Report) CEO Paul Otellini has faced a slew of challenges since stepping into the company's hot seat five years ago, but is credited with guiding his company through one of the most turbulent eras in U.S. economic history. He has also dragged Intel back to its technology roots while bolstering its reputation for innovation.

In May 2005, when Otellini took over from Craig Barrett as CEO, the world was blissfully unaware of the ticking sub-prime mortgage time bomb. A 31-year Intel veteran when he was promoted to CEO, Otellini took over at a crucial time for the no.1 chipmaker.

Intel CEO Paul Otellini guides Intel with bright ideas.

"I think he has done a very good job in terms of taking the company from a period when it was clearly underperforming to one where it has a much stronger competitive position, said Nathan Brookwood, research fellow at consulting and market research firm Insight 64.

In the years prior to Otellini's appointment as CEO, Intel had diversified into new areas such as telecom components, a strategy which left the firm searching for direction and also opened the door for AMD (AMD - Get Report).

"Whenever Intel strays from its x86 roots, it tends to have lots of problems -- it kind of drifts," said Brookwood. "When it does things that are close to its roots, it does much better."

Back in 2004, Intel was unsure how to tackle arch-rival AMD's Opteron chip, a popular x86 chip for servers and workstations that helped the much-smaller firm carve a presence in the data center. AMD's success and innovation was clearly a thorn in Intel's side, says Charles King, president of analyst firm Pund-IT.

" Before Otellini there was a sense that if they ignored it long enough, Opteron would flame out," said King. Under Otellini, Intel has thrown resources at its own Xeon chips, boosting its technology story. Last week the chipmaker even unveiled its first 32-nanometer chips, and has promised to roll the technology out to Xeon server chips over the next three months. In contrast, AMD will play catch-up -- it's not expected to implement 32-nanometer until sometime next year.

Intel, which blew past analysts' estimates in its fourth-quarter results last week, has also been quick to jump on new technology trends.

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