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Challenges ahead for AMD, say analysts

Posted: 17 Jan 2011     Print Version  Bookmark and Share

Keywords:Dirk Meyer  Jerry Sanders III  AMD's challenges 

Advanced Micro Devices Inc. has announced the appointment of AMD CFO and senior VP Thomas Seifert as interim CEO following the abrupt exit of its president and CEO, Dirk Meyer. Industry analysts speculate on the challenges that lie ahead.

Hans Mosesmann, an analyst with Raymond James & Associates, said: ''As a lagging indicator, last night AMD announced in somewhat rushed fashion that CEO Dirk Meyer had resigned with CFO Thomas Seifert becoming interim CEO. We believe AMD has an immense challenge ahead, and getting a few points of share in commercial notebooks, for example, is not going to change the strategic challenge ahead in x86 computing―something that even the mighty Intel may not have figured out quite yet.

We speculate that only one leader could make an AMD turnaround plausible, definitely exciting, and that is Jerry Sanders III, AMD's co-founder. A bitter pill to swallow for some on the board of directors for sure; but what AMD needs more today than ever is leadership, vision, and passion (not an engineer's engineer or an operational manager).''

Craig Berger, an analyst with FBR, said: ''While no explanation has been offered, we note the lack of a tablet chip offering, server share loss to Intel and continued delays in Fusion products. It is possible the board's position is that AMD is behind in mobile computing (ARM chips) and has poorly executed in server and Fusion. If so, we think the board wants to 'have its cake and eat it, too,' as it expects AMD to generate growing and material cash flow while also investing meaningfully in necessary R&D efforts. As AMD moves forward without a leader or clear strategic vision (NVDA has created far more value in the past five years than AMD!), shares will likely move lower until some clarity is achieved.''

Analyst Doug Freedman of Gleacher & Co., said: ''In our view, we believe it was likely Meyer's decision to leave AMD (vs. the other way around―why would the board leave the CEO slot unfilled?), perhaps relating to differences in the timeframe to select (newer) initiatives. Our best guess is that Dirk's vision could have been simply pushed further out than what the board was envisioning relating to the newer initiatives (perhaps tablet or mobile/ARM-based strategy where AMD has been noncommittal). In the near-term, we do not believe there is any risk to product roadmap or estimates.

If our prognostication of Meyer's departure proves correct, there is little doubt that No.1 on the docket will be ongoing improvement in low-power processors (into 4W or less vs. lowest 8W now) to fight ARM in burgeoning growth markets, along with plans to accelerate server market share after declining to roughly 7 per cent in CY10.''

Mark LaPedus
EE Times

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