Opinion - The decision of Hector Ruiz to step down from his role as CEO may not be a surprise to many, especially to those who have been following recent stories. But the timing of the announcement is surprising - in several ways. First, Ruiz leaves a company that is in shambles and way before the saving move, Asset Smart, is announced. Second, the departure is perfectly consistent with AMD’s history. But the question will be: Can Dirk Meyer repeat the cycle and get AMD out of trouble again?
Today’s announcement could leave you shocked: AMD just announced its seventh consecutive loss - totaling a stunning $5.5 billion since Q4 2006 and the time the ATI acquisition took full effect - and AMD’s CEO announces his resignation. What followed was a shoulder-padding and belly-rubbing thanks-Hector-thanks-Dirk dialog between the old and new executive that sounded, well, strange. According to Ruiz, now is the best time to hand the company over to Meyer. Can you say run and hide?
Ok, let’s be rational here. Ruiz has been rumored to have escaped his firing several times in the past and it was no secret that, lately, he wasn’t loved by analysts and investors anymore. Dirk Meyer was generally expected to become the next CEO. The question was not if, but when. Last December, Reuters ran an article stating that Hector Ruiz would not step down in 2008. And back then, analyst Ashok Kumar was quoted saying that "Ruiz has to turn the ship around before he can turn over the helm." Really? No, he did not.
In fact, when Ruiz took over AMD from the legendary Jerry Sanders, he was in a similar situation as Meyer is today. Actually, the similarities are striking: The economy was in a terrible shape. AMD had just announced its third straight quarterly loss with no short term solution in sight. As today, sales of consumer notebooks and desktops did not show any gains (and were down back then), but the company had "Hammer" in planning - a product which eventually turned into the Athlon 64 family of products that brought Intel down to its knees in 2005. Meyer’s position is similar, but a bit more challenging: The company’s balance sheet is a disaster, losses are much higher, but there are new and promising products in sight - such as Fusion.
So, Ruiz’ move isn’t particularly surprising. In some way, he is continuing a tradition and, from that point of view, it is exactly the right time to leave.
But who is Meyer and what is on his agenda? Meyer has engineering background and came to AMD in 1995, when he led engineering for the Athlon processor. In April 1999, he became vice president of engineering, in 2001 group vice president and general manager of AMD’s microprocessor business and in 2002 senior vice president and an executive officer of AMD. Before AMD, he was at Digital Equipment Corporation (DEC, alter acquired by Compaq, which was acquired by HP), where he was a co-architect of the Alpha 21064 and 21264 microprocessors.
It is too early to say whether Meyer’s engineering background fits what AMD needs at this time, but I actually feel that AMD should have looked to the blue team, where a business expert is in charge - Paul Otellini. Makes you think, right?
From what we heard at the conference call, Meyer won’t be introducing many changes. The company stays on track to get its operating expenses down to $1.5 billion per quarter (they are now slightly above $1.6 billion), as the company’s chief financial officer Bob Rivet said that it is unlikely that the company will make much more than $1.5 billion per quarter in the current economic climate. On the product side, Meyer is pushing 45 nm chips, which are now scheduled to debut early in Q4 (or 3-6 months late from the original plan), with a complete transition from 65 nm planned to be happening two to three months later. Everything points to Asset Smart as the big savior of the company. No announcement has been made, but Rivet said that "Asset Smart is not a 2009 event", indicating that the announcement will be made in Q3 or Q4. According to our sources, Asset Smart will spin off AMD’s fabs into a new company that will be run by Hector Ruiz. Dirk Meyer will keep control of the development and then fabless AMD.
So, don’t expect any big changes from Dirk Meyer for now. Meyer’s appointment makes sense from the view of AMD history and Ruiz’ legacy is preserved.
Asset Smart (or Asset Light) is what will bring the big change. Our sources mentioned that AMD is already working on an announcement and a strategy how to sell the story.
However, from a general view, Meyer has now one of the toughest jobs in the industry - to lead an extremely vulnerable semiconductor company. It is in all our interest that AMD will come back, get more competitive and drive innovation in the processor industry again. An Intel-only world would be boring and certainly not offer the excitement we have seen in the past two years.
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Intel monopoly definitely won't be very fun
I think AMD will stay afloat. The 48*0's are phenomenal, and if they can push a 45nm shrink fast enough they may catch up with big ol' Intel in good time.Reply
I don't see them leading Intel until a few years, but they will survive.
Sad indeed. I have owned mostly AMD processors and have enjoyed them very much. I hope that AMD can make a come back as it would be boring and probably more expensive with just Intell to deal with. I know I will get flack for saying this this but I a certain that Intell was not playing fair prior to the release of its core2 processor. Now they do have the better product but prior to core2 they used some muscle to keep themselves on top ie the antitrust case.Reply
^^I second that.Reply
There is a very strict timeline set by shareholders for Intel to release and engineer their processors and top heads at Intel would easily be fired if they strayed from it. Also Intel wouldn't be able to sell any processors if they keep very similar performing processors year after because there would be no need for people to buy they same exact computer. So don't give me any bs that no AMD would ruin to future computer market because Intel wouldn't be around if they stopped increasing their cpus performance and go down the drains themselves. Also AMD's timeline sucks cause its not like Intels at all, AMD's shareholders need to be pressuring tops heads at AMD like Intel's shareholders do.Reply
From year ago, much of base product is gone with little replacement public wants. dual processors just didn't have numbers to justify beyond X2. Keeping Up with Nvidia is like bucking bronco.Reply
Its strong company that engineering has lead to slow spot, Vista may Be That Slow Spot. Barcelona Was Night Mare. Leaving open spot.
Knocking Buck out of competitors pockets is Great Thing. MEDIA IS RISING.People LIKE AMD More Today Than EVER.
Signed:PHYSICIAN THOMAS STEWART VON DRASHEK M.D.
I've been buying mostly Intel products lately, though I'm considering building myself AMD systems and recommending them to people I build systems for. Now that AMD is finally somewhat competitive, I can justify it. And if that's what it takes to keep AMD afloat, I'm certainly willing. I love my Intel but I won't deal with a monopoly.Reply
Yay! Fanboi, competition is good to be precise, like what happen to Nvidia recently even though they have this latest and the fastest product but because of AMD/ATI competitive pricing/performance they have to reduce prices like an axe slashing at large chunk in just few weeks from launching.Reply
I dop hope AMD introduces great processor this year that would keep it close with Intel... I used Athlon Processors in the Office way back 2003... They were better than Intel thenReply
thg's fanboyism reveals itself in the last sentence..Reply
"An Intel-only world would be boring and certainly not offer the excitement we have seen in the past two years."
..means to say that thg wasn't really excited when AMD brought Intel "to its knees" in 2005 and when AMD introduced the K8 architecture that pushed Intel to improve.
Is thg becoming the faux news network of technology?