AMD could better fight Intel with new CEO

Computerworld - With its CEO gone, chip maker AMD has a chance to reinvigorate itself and start beating rival Intel on some new products.

AMD announced late Monday that after reaching a "mutual agreement" with the board of directors, Dirk Meyer will step down from the CEO position immediately, and CFO and Senior Vice President Thomas Seifert will step in as interim CEO.

Meyer first joined AMD in 1996 and became the company's top executive in July 2008.

In a statement yesterday, AMD Chairman Bruce Claflin praised Meyer for helping to stabilize the company during difficult times, but he said the board is looking to boost AMD's growth and improve its financial performance.

"The board believes we have the opportunity to create increased shareholder value over time," said Claflin. "This will require the company to have significant growth, establish market leadership and generate superior financial returns."

Two and a half years ago, AMD said Meyer was brought in to reinvigorate the company. Now, he's out so someone else can take a shot at revitalizing the company, which has struggled to compete against market leader Intel.

Dan Olds, an analyst at Gabriel Consulting Group, said he doesn't think the change in leadership is a sign of deeper trouble at AMD.

"AMD hasn't had a solid and sustainable leadership position in the market since 2002 or 2003, when they were riding their 64-bit dual-core products," Olds noted. "Of course, they've been competing with a newly aggressive Intel, which, when roused, is one of the most formidable competitors in the industry. I think the board was looking for innovation, growth and a product organization that can beat Intel to the punch on new products."

However, given Intel's market position and the depth of its coffers, that will be a tough order, he added.

Rob Enderle, an analyst at Enderle Group, said AMD's failure to jump into the burgeoning tablet or smartphone markets could be one of the factors that led to the board's decision to replace Meyer.

"[The board] wanted AMD to be more aggressive on big opportunities," Enderle said. "Tablets are trending, and AMD didn't seem to either anticipate or respond timely to the opportunity. The board wanted someone who was more aggressive."

Intel, on the other hand, is acting aggressively in the netbook and tablet markets. To keep up, AMD will have to embrace a strategy involving ARM technology, which is focused on smaller devices, or it will have to come up with a creative counterstrategy, Enderle said.

But ignoring the situation isn't a smart option.

Olds was quick to note that AMD is a "reasonably strong" company. The company has some strong processors in the market, but it doesn't lead in any product category. According to Olds, that needs to be one of the new CEO's top priorities -- to get out in front again.

"AMD needs to focus on getting new products out the door faster and beating Intel on something," he said. "They will also need to keep their eye on other competitors, like Nvidia, who will use an ARM/GPU combination to chip away at both Intel and AMD both on personal computing products and in high-end servers. But it would still do AMD a world of good to be first with a world-beating product, like they did with the 64-bit Opteron processors and their first dual-core CPUs. But that's a task that's much easier to say than do."

The board has created a search committee to find the company's next CEO.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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