AMD’s CEO Resigns, Chip Maker Searches for Successor

SAN FRANCISCO, Jan 10 (Reuters) – Advanced Micro Devices
Inc (NYSE:AMD) Inc’s chief executive resigned on Monday as the
world’s No. 2 maker of PC microprocessor chips said it was
seeking a new CEO to boost the company’s growth, sending shares
down nearly 4 percent in after-hours trading.

AMD said the resignation of Dirk Meyer was the result of a
"mutual agreement" with the board of directors and that Chief
Financial Officer Thomas Seifert will become interim CEO,
effective immediately, as the company looks for a permanent
replacement.

The sudden departure of the 49-year-old Meyer, who headed
the team that developed one of AMD’s most successful chips
before becoming CEO in 2008, caught some Wall Street analysts
by surprise.

"This is no doubt going to be viewed as a potential loss of
momentum," said Gleacher & Company analyst Doug Freedman.

The company said there were no financial or performance
issues with Meyer that led to his departure. A spokesman
declined to say how long the change had been in the works or
provide other details on the negotiations around his exit.

A source familiar with the matter said the board viewed
Meyer as somebody who stabilized AMD and helped turn it around,
but wanted to look elsewhere for an executive to accelerate the
company’s growth.

AMD is a distant second in the PC microprocessor market
behind Intel Corp (NASDAQ:INTC), whose chips are used in more than
80 percent of the world’s PCs.

But consumers are increasingly turning to new gadgets, like
smartphones and tablets. Those devices typically use more
power-efficient chips than the so-called x86-based processors
sold by Intel and AMD that have served as the main processing
brains of PCs for years.

Last week, Microsoft Corp (NASDAQ:MSFT) announced that its
Windows PC operating system would for the first time support
chips based on the technology developed by ARM Holdings
(L:ARM), in addition to x86 chips.

Shares of chipmaker Nvidia Corp (NASDAQ:NVDA) surged 29 percent
last week as the company’s new Tegra 2 mobile chip was
showcased in several new smartphones and tablet devices at the
Consumer Electronics Show in Las Vegas.

"I think what happened over last week has not helped Dirk’s
tenure," said Pacific Crest Securities analyst Michael
McConnell.

"It’s just that they did not optimize it for the tablet
market and for lightweight mobile computing. They decided to
stay traditional and go after notebooks," McConnell said.

The change in AMD’s leadership comes less than three years
after Meyer took the reins and brought stability to the
chipmaker’s operations. A turbulent period under previous CEO
Hector Ruiz was marked by a technical glitch that delayed the
availability of a key product.

Meyer oversaw AMD as it spun off its manufacturing arm into
a separate company, carrying out a plan laid out by Ruiz.

"Dirk was very impressive in getting the company on a
stable footing," said Gleacher & Company’s Freedman. But he
added, "I don’t know that people viewed Dirk as being the best
visionary and strategy roadmap guy."

Seifert, 47, will maintain his current duties as CFO and
has asked not to be considered for the permanent CEO job,
according to the company’s statement.

Shares of AMD were down 3.9 percent at $8.83 in after-hours
trading on Monday.

AMD’s shares had closed Monday’s regular trading session at
$9.19, which was about 74 percent above their price when Meyer
took over as CEO in July 2008. Their 52-week high was $10.24 on
April 15.

AMD also said its fourth quarter revenue increased 2
percent sequentially to $1.65 billion, with gross profit margin
of roughly 45 percent. The company is scheduled to deliver full
fourth quarter results on Thursday, Jan. 20. Analysts polled by
Thomson Reuters I/B/E/S expected fourth-quarter sales of $1.62
billion, with a 45.4 percent gross margin.

"Dirk became CEO during difficult times," AMD Chairman of
the Board Bruce Claflin said in a statement, citing Meyer’s
various accomplishments.

"However, the Board believes we have the opportunity to
create increased shareholder value over time," Claflin said.

"This will require the company to have significant growth,
establish market leadership and generate superior financial
returns. We believe a change in leadership at this time will
accelerate the company’s ability to accomplish these
objectives."
(Reporting by Alexei Oreskovic and Noel Randewich; editing by
Carol Bishopric, Gary Hill)

 

RELATED ARTICLES

Must Read