With new CEO, AMD could fix missed opportunities

With former Lenovo exec Rory Read on board, chip maker gets back in the game with Intel

With a new CEO finally at the helm, AMD can begin to move forward in what has become an Intel world.

The chip maker announced on Thursday that its board of directors has appointed Rory P. Read, the former president and chief operating officer of Lenovo, as the president and CEO of AMD.

Read, who took the reins on Thursday, has also been appointed to AMD's board of directors.

The company took about seven months to find a new chief executive, and analysts say finally filling that post will give stability and new direction to AMD, which has been trailing rival Intel in the semiconductor industry.

"At this point, not having a CEO was becoming a major problem and likely costing customers," said Rob Enderle, an analyst at Enderle Group. "This will stabilize that problem and allow the company to appear to be well led."

"Appearance is incredibly important, and while the CFO was doing a good job [as interim CEO], investors and customers want the lead role in a company filled by someone they believe will stay in it," Enderle added.

AMD had announced in January that its last CEO, Dirk Meyer, was leaving the company after reaching a "mutual agreement" with the board of directors.

Enderle said AMD's board has been looking for someone who will work well with them to drive the company forward.

"For the job and AMD's active board, he is a good match," he added. "Their prior CEO wasn't taking board direction well, and the board wanted someone with CEO and industry skills who would take direction. They got that with Read."

And Charles King, an analyst with Pund-IT, noted that Read's experience with Lenovo should be just what AMD needs in this tough market.

"Read obviously understands AMD's key x86 markets, and he's coming off a successful run at Lenovo," King said. "Perhaps most important are his understanding of and connections in China and other Asian markets. That should bode well for AMD's global efforts."

King added that Read is a known entity in the industry, and that should give people added confidence.

"Read's hire is a good first step in quelling any shareholder concerns about AMD's short-term prospects," he said. "I'll have to wait to see what his longer-term strategy is before making an assessment."

Part of Read's initial agenda most likely will be dealing with AMD's distant position to Intel in the semiconductor market.

AMD is generally seen as a reasonably strong company with good chips in its product roster, but it hasn't been able to keep up with major changes in the chip market.

Enderle noted last January that AMD failed to dive into the burgeoning tablet and smartphone markets. That may have been a bad decision, since Apple's iPad and other tablets have cut into PC sales.

Analysts say AMD needs to be more aggressive and jump on big opportunities.

Intel, on the other hand, has been moving aggressively in the netbook and tablet markets. And that has helped it to continue to outpace AMD.

Dan Olds, an analyst at Gabriel Consulting Group, said AMD has some strong processors, such as its Fusion products, which combine CPU and graphics processing on the same chip. However, AMD needs to now expand on that.

"They need to find ways to exploit this architecture in other segments, like enterprise and scientific and technical computing, in order to be firing on all cylinders," Olds said. "This is a company that has been rudderless, at least to some extent, for quite a while now. If [Read] can provide some leadership and show them a path, they'll follow."

Analysts agreed, however, that it would be a long shot for AMD to catch up to Intel at this point. But that doesn't mean there aren't opportunities for the company to grab.

"AMD probably can't keep pace with Intel on a chip-for-chip basis," Olds said. "They can't match Intel's investment into process technology or research into exotic materials. However, they can do some things -- like their Fusion initiative ... into products that can address specific needs arguably better than Intel."

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 on Google+, or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

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