Updated from 9:02 a.m. EST

Intel

(INTC) - Get Report

Thursday formally outlined its succession plan, naming Paul S. Otellini, its president and COO, as the company's next leader.

But investors shrugged off the news as a nonevent, since Otellini was already broadly viewed as the heir to current CEO Craig Barrett. In recent trading, Intel shares rose 24 cents, or 1.1%, to $23.10, in line with the benchmark chip index gain of 1%.

Intel said Barrett, 65, will replace Andrew S. Grove as chairman.

The changes will become effective at the time of the company's next annual stockholder meeting on May 18, 2005.

At Midwest Research, analyst Kevin Rottinghaus noted that Otellini has already made some big changes at Intel, including announcing a restructuring of the money-losing communications group. "You could probably interpret

his being named CEO as a positive," he said, though he added the succession is so well known that it wasn't likely to affect Intel's share price.

Still, new leadership at the top level might help to improve sentiment on Intel, which has over the past year been embarrassed by a string of

unusual operational problems. Most recently Intel

backed off its year-ago pledge to introduce a digital TV chip.

At Intel's Developer Forum late this summer, Otellini himself acknowledged while he didn't want to "launder dirty laundry in public," Intel had "had some fumbles." He said the company had reviewed its product roadmap and sought to introduce greater consistency into its design schedule at the platform level.

Otellini, 54, joined Intel in 1974 and has been president and COO since January 2002. He was elected to the board in 2002. Barrett, who also joined Intel in 1974, has served as CEO since 1998, when he replaced Grove.

Grove will no longer serve on the Intel board, but will assume the role of senior adviser to the board and senior management, the company said.

Intel shares have lost about a third of their value in recent months, reflecting a broad-based slowdown in the chip sector.