Advanced Micro Devices, the world’s second largest maker of x86 central processing units, on Thursday announced that its chief executive officer Hector Ruiz has stepped down from his top executive position and that the board of directors elected president and chief operating officer Derrick Meyer to become the next CEO of AMD. Mr. Ruiz will continue to serve as the executive chairman of the board.

As executive chairman, Mr. Ruiz will ensure a smooth executive leadership transition, focus on driving the company’s asset smart strategy to completion, and assist with high-level government and strategic partner relations.

Hector Ruiz: From Sanders to Meyer

Hector Ruiz joined AMD in January 2000 as president and chief operating officer, just months after AMD released its first AMD Athlon microprocessor that helped the chipmaker to seriously challenge long-time market leader Intel and stop to be a “second source” supplier of low-end microprocessors. Hector Ruiz was named chief executive officer in April 2002, when founder of the company Jerry Sanders stepped down, just a little ahead of AMD’s triumphal launch of AMD Opteron and Athlon 64 processors, which had been outperforming rivals from Intel for years. He was appointed as chairman of the board in April 2004.

Mr. Ruiz has achieved quite a lot of goals at AMD, including market share increase, expansion of design centers and manufacturing facilities, starting platform-oriented strategy with the acquisition of ATI Technologies, building relations with key customers and transforming AMD into a respected supplier of commercial and enterprise-class components.

“Under Hector’s strong leadership, AMD drove the industry adoption of pervasive 64-bit and multicore computing, became a trusted enterprise-class partner to leading technology suppliers and significantly expanded its global footprint in high-growth markets like China,” said Robert Palmer, lead independent director.

But there are failures too. Even though under the rule of Mr. Ruiz AMD managed to increase its market share rather considerably from about 18% to approximately 23%, the key technologies that helped AMD to transform into a leading CPU maker from an underdog – HyperTransport, K7 and K8 micro-architectures – were developed under the supervision of the previous chief executive and the founder of AMD, Jerry Sanders.

Hector Ruiz also could not fix several fundamental issues that AMD has always had. The ramp up of new processor micro-architectures has always took a considerable amount of time at AMD and the delays of chips based on K10 micro-architecture with up to four processing engines is a good proof for that. Additionally, transitions to new manufacturing technologies have also been slow at AMD and current uncertainties with 45nm transition are a clear evidence for the issue.

Dirk Meyer: From Technologist to Executive

Dirk Meyer joined AMD in 1995 and in 1996 was promoted to director of engineering for the AMD Athlon microprocessor development program in Austin, Texas. In April 1999, he was promoted to vice president of engineering for the computation products group (CPG) and in 2001 became group vice president of CPG. In 2002, he was named senior vice president of CPG and was named an executive officer of AMD. In 2004, he was promoted to executive vice president of CPG and in 2005 was appointed president and chief operating officer of AMD’s Microprocessor Solutions Sector.

Nevertheless, while Dirk Meyer has microprocessor development background, he has been one of the primary decision makers at the company for three years and is also responsible for both success of the original Athlon and Athlon 64/Opteron processors as well as failure to speed up the development of quad-core processor in the light of Intel’s Core 2 launch. Moreover, it was Meyer, who was co-executing AMD when graphics business of ATI tumbled by 40% year over year in 2007.

Still, Mr. Ruiz seems to be confident in his successor. At the end, he knows how to execute a huge company and he knows fundamentals of microprocessors.

“Dirk is a gifted leader who possesses the right skills and experience to continue driving AMD and the industry forward in new, compelling directions. I am placing the company in excellent hands,” Mr.Ruiz said.

The Future of AMD

After AMD has posted losses for the seventh consecutive quarter, investors are likely to welcome the changeover of chief executive officer. But the question is whether Dirk Meyer is really able to improve situation in the short term.

The short-term victory of the company will be completely based on the success of already released ATI Radeon HD 4000-series graphics cards as well as the success of the forthcoming quad-core chip code-named Shanghai. If both pose serious competition to rival’s products, then AMD will be able to get back into black even despite of economics recession. If not, AMD will have to continue lowering prices and have low profit margin.

AMD’s mid-term success depends on the execution of its multi-core roadmap that includes 12-core server chips in two years from now, the launch of DirectX 11 graphics processing units in 2009 as well as the release of hybrid processors that combine general purpose as well as graphics processing cores.

The long-term prospects of AMD are conditioned by a number of factors, including the performance of next-generation code-named Bulldozer micro-architecture, the success of the hybrid processors concept as well as competitive offerings on the market of graphics processing units.

In the meantime, Mr, Ruiz and Mr. Meyer will have to finish development of the asset smart strategy and start to implement it aggressively.

There is a problem, though. AMD already owes $5.29 billion to its creditors and posts another losses, which may ruin confidence of its investors and creditors in the executive team in general. Even though AMD has already switched several executives in the past couple of quarters, it does not seem that it helped to improve the execution of the company.

The rapid changeover of the CEO was a surprise, as Hector Ruiz himself said late in 2007 he had no plans to step down. Therefore, the situation seems to be heating up, which means that AMD and its new chief exec need to act right now.