AMD appoints new CEO as losses continue

Ruiz to move over to chairman; COO Dirk Meyer named as successor

Advanced Micro Devices Inc. has replaced Hector Ruiz with Dirk Meyer as its CEO, as the company reported its seventh consecutive quarterly net loss today.

AMD's board elected Meyer to the CEO spot effective immediately, AMD said. He was previously president and chief operating officer and has been with AMD for 12 years. Ruiz will become executive chairman and chairman of AMD's board of directors.

The chip maker also announced that it has decided to divest its handheld and digital TV chip businesses, which the company had merged into its consumer electronics group after the 2006 acquisition of ATI Technologies Inc. Last week, AMD announced it would take a charge of $880 million related to the impaired assets of those businesses.

AMD's revenue from continuing operations for the second quarter rose 3% from a year earlier, to $1.35 billion. But the revenue total was down 7% from this year's first quarter, and the company posted a net loss of $1.19 billion, or $1.96 per share, for the second quarter.

"We have a company rich with great people, great products, great spirit and a lot of great potential," Meyer said on a conference call following the announcements. "Looking at the recent past, we have not been living up to that potential. Looking forward, we will."

Meyer, who is retaining the title of president in addition to becoming CEO, said he plans to focus AMD more narrowly on large-volume "sweet spots" — namely, chips for PCs and commodity servers. He also wants to increase the company's focus on execution, in an effort to improve efficiency and the dependable delivery of products.

AMD has suffered from a variety of product delays as it struggles to compete against a much bigger rival in Intel Corp. But AMD officials said they expect the company to achieve sustained profitability beginning in the second half of this year on the strength of new products and lower manufacturing costs.

Chips based on AMD's long-awaited 45-nanometer manufacturing process are in production and are on track to go into volume production early in the fourth quarter, the officials said. The 45nm process will enable AMD to pack more processing power into smaller chips and should lower its costs as well. But Intel has enjoyed a big lead, after putting 45nm chips into volume production last October.

AMD said its Fusion architecture, bringing together data and graphics processing capabilities, is making progress as well. For example, the company claimed that Puma, a new chip set for notebook PCs that combines a separate microprocessor and graphics engine, has scored 100 design wins from PC makers thus far. A single chip containing both types of processors will begin sampling in 2009, according to AMD.

Meyer said that he expects a normal seasonal trend during the current third quarter. "The market on a global basis is healthy," he said. "Some of the more developed areas are weaker, but the emerging markets are still strong."

AMD said that as chairman, Ruiz will continue to oversee the "asset smart" strategy initiated under his watch in an effort to make AMD less capital-intensive. The company wouldn't provide more details on what sort of deals the company plans to make to carry out that strategy. Ruiz also will help maintain the chip maker's relationships with high-level government officials and key business partners.

Meanwhile, AMD said it thinks the handheld and digital TV chip units it's putting up for sale would be more successful in the hands of a company that is more focused on those areas. Additional asset sales will likely be announced late this year or in early 2009, the company said.

Copyright © 2008 IDG Communications, Inc.

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