No Financial Scandal Involved in AMD CEO's Resignation - Sources

AMD May Need a Type of Chief Executive Officer

by Anton Shilov
01/10/2011 | 09:23 PM

A number of recent big departures of high-ranking executives in the high-tech industry were either caused by some types of scandals or were followed by them closely. However, this is not the case with the resignation of Dirk Meyer, chief executive officer of Advanced Micro Devices. Based on comments from a number of industrial sources, the board of directors at AMD was not exactly happy with the company's performance, decisions and Mr. Meyer's vision of the future.

 

"This action was not taken over financial, technology or execution issues," said Michael Silverman, a spokesperson for AMD.

Even though it is clear that the chief executive officer of AMD managed to transform the company significantly during the economic crisis and even managed to put the roadmap and product launches back on track, it looks like the board of directors was still not satisfied with his work, past decisions and visions of the future. A source with knowledge of the matter told X-bit labs that while the board generally satisfied with Mr. Meyers long-term vision of AMD's future, they considered that those plans needed to be altered, particularly in the mobile space. Apparently, there were disagreements, which, along with other things, lead to resignation of Dirk Meyer, a legend at Digital and AMD.

The lineup of chips for mobile devices has been AMD's Achille's heel for a long time, yet the team of Mr. Meyer and his predecessor Hector Ruiz only started to develop low-power x86 micro-architecture only in 2006 - 2007 timeframe, which is why AMD missed the emergence of netbook market in 2008 - 2009 (back then Mr. Meyer told that netbooks would die shortly). Due to the lack of low-power system-on-chip (SoC) design produced using a leading edge-process technology, the company cannot compete with its 9W Ontario on the market of tablets. At a recent investor conference the now former head of AMD told the audience that the tablet market was limited to Apple back then only to find out tens of slate PCs at the CES 2011. This situation clearly frustrated the board of directors, especially after numerous delays of Bulldozer, Fusion and other key product designs over the previous years.

Perhaps, AMD is not too substantially behind Intel with its low-power SoC offerings and they could be developed in relatively short timeframe. But it is clear that AMD is completely unable to compete with ARM-based SoCs on the tablet market and, to make the matters worse, on the market of smartphones, set-top-boxes and other devices which sales are going to increase dramatically in the following years. Partly, this happened because Mr. Meyer and Mr. Ruiz sold the ATI Imageon business unit to Qualcomm in early 2008 and ceased to develop AMD's own ARM-based offerings before that.

"While pleased with AMD's progress, the board felt the company has untapped potential in both its existing markets and particularly in new segments, given the rapidly changing market dynamics. The board believes that a change in leadership at this time can accelerate our ability to accomplish its objectives," said Mr. Silverman.

While the claim is politically correct, it is very clear that the board is particularly dissatisfied with Dirk Meyer's ability to foresee emergence of new technologies and new market demands. In addition, since Mr. Meyer is essentially an engineer, he is also not exactly keen on attracting attention to the company and its products, something that also increases market capitalization of any company.

"The key thing is that executives with engineering and/or finance career paths tend to make competent but dull CEOs, while those who get there via sales and marketing turn out to be better corporate representatives. During its Jerry Sanders period, AMD looked bigger than life, and bigger than the company's sales and technology justified. Over the past decade, AMD has grown in terms of its technology prowess, but few (other than geeks) have noticed," said Nathan Brookwood, the principal analyst at Insight 64.

Any new chief executive officer should not only be a better visionary than Mr. Meyer or Mr. Ruiz, but also should be more visible figure in the world of technology or, perhaps, not only technology.

"Based on my knowledge, the board of directors thinks AMD has more potential and needs a bigger CEO to help company realize it," said Jon Peddie, the principal analyst at Jon Peddie Research.

"Now that AMD has resolved many of the issues that plagued it in the past, the board is looking for someone who can help attract the attention of the other 98% of the population that doesn't live and breathe the technology business on a 24x7 basis," added Mr. Brookwood.