New AMD CEO shows board confident about turnaround
Dirk Meyer’s promotion to chief executive of Advanced Micro Devices Inc (AMD.N: Quote, Profile, Research, Stock Buzz) shows that the board believes the struggling chipmaker is on the right track despite past missteps.
Meyer already was being groomed to be CEO over the past two years by outgoing Chief Executive Hector Ruiz, who will become executive chairman and focus on revamping AMD manufacturing.
“They really must think they’re at a turn in the business fundamentals and ‘Let’s make the move now’,” said Doug Freedman, an analyst at American Technology Research. “You really don’t want to make the change to the new guy to just deliver more bad news.”
The Sunnyvale, California-based company had struggled with the delay of a key server chip, Barcelona, that is now shipping in volume. It has faced a resurgent Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) in the last couple years, as well as plenty of bad news of its own.
On Thursday, it announced a wider-than-expected loss — its seventh consecutive quarterly loss — and the CEO change get a free credit report. It has been losing market share to Intel and remains a generation behind its Silicon Valley rival in chip-making technology.
Meyer, who had been president and chief operating officer, said he would focus on execution and returning to profit in his new job. Ruiz will continue working on AMD’s asset-smart manufacturing strategy and promised details by year’s end.
The wider-than-expected loss overshadowed AMD’s announcement of Meyer’s promotion, which had been largely expected, said Stifel Nicolaus analyst Cody Acree.
“Over the last few months there’s been much more chatter and talk among investors that this was likely to happen,” Acree said. “Had there not been a lot of talk already, it probably would have been enough to move the stock higher.”
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