AMD Board Forces Chief Executive Meyer Resignation

More than two years after taking over a struggling AMD and returning it to stability, Dirk Meyer has been forced out as chief executive of the world’s second largest chip maker by a board of directors apparently looking for faster growth.

Meyer’s resignation on 10 January surprised many industry observers, particularly given the strong showing AMD had at the just concluded Consumer Electronics Show 2011, the announcement of its first Fusion processors and the fact that the company was 10 days away from announcing fourth-quarter financial number that promised solid if not spectacular results.

Surprise resignation

“Coming out of CES last week, I thought the company had done very well,” Charles King, an analyst with Pund-IT Research, said in an interview with eWEEK. “I came away feeling very impressed with the number of products I saw, but I guess thigs were not all that good in AMDville.”

During his tenure as AMD’s chief executive, Meyer oversaw the company’s shedding of its manfacturing facilities – which spun off to create GlobalFoundries – the settlement of its long-standing legal dispute with larger rival Intel, and the launch of the first of its Fusion APU (accelerated processing unit) chips, which integrate the CPU and graphics capabilities on a single die. The APU launch was the result of a vision AMD officials had when they bought graphics technology maker ATI in 2006. However, the delays in bringing out the Fusion line allowed Intel to catch up with its “Sandy Bridge” processor platform that offers integrated graphics and, like the Fusion APUs, also launched last week at CES.

In a statement released by the company’s board of directors, Chairman Bruce Caflin thanked Meyer for his leadership over the past two-plus years as chief executive, but indicated there was a disagreement about the direction and vision for the company as it enters an important 2011.

“Dirk became chief executive during difficult times,” Claflin said in the statement. “He successfully stabilised AMD while simultaneously concluding strategic initiatives including the launch of GlobalFoundries, the successful settlement of our litigation with Intel and delivering Fusion APUs to the market. However, the Board believes we have the opportunity to create increased shareholder value over time. This will require the company to have significant growth, establish market leadership and generate superior financial returns. We believe a change in leadership at this time will accelerate the company’s ability to accomplish these objectives.”

Roger Kay, an analyst with Endpoint Technologies Associates, said the timing of Meyer’s departure left him a little bewildered as well. After eliminating such possibilities as company finances, AMD’s technology roadmap and personal scandal, Kay said the only possibility that made sense was leadership.

“It’s probably the business of vision, and whether or not [Meyer] can be the inspiring leader and bring the company to the next level,” Kay said in an interview with eWEEK.

Visionary needed?

Meyer’s engineering background has served him well in his various roles within AMD. Before becoming chief executive, Meyer was instrumental in the development of Opteron, which when released in 2003 gave AMD a technological advantage over Intel in the highly competitive server space. However, as chief executive he has been viewed as somewhat “pedestrian” in his long-term views for the company, not tremendouly inspiring and as a “caretaker” until the board could find a more visionary person for the job, Kay said.

“The issue of Dirk being more of a mechanic than a visionary might have been reason for it,” he said.

Citing anonymous sources, Bloomberg News reported that several months ago, Meyer and other executives presented a strategic plan that disappointed the directors, who were looking for more aggressive changes. They also reportedly have been troubled by AMD’s inability to take server chip market share away from Intel and AMD’s slow response to the rise of tablet PCs.

In October, while announcing quarterly financial results, Meyer said AMD was taking a slower approach than Intel in the burgeoning tablet market, but promised strong products when AMD eventually did step intot he space. That came two days after Intel chief executive Paul Otellini said his company would quickly become a major player in the tablet market, which was reinvigorated last year with the release by Apple of the iPad.

Pund-IT’s King said Opteron has been an area where AMD has faltered recently. The platform gave AMD an early advantage over Intel, but the larger chip maker stormed back with enhancements to its Xeon products, and while Intel made headlines with the chips, AMD was unable to come up with a strong narrative for Opteron.

“AMD couldn’t capitalise on the initial Opteron push,” King said.

Threats loom

Meyer’s resignation also comes at a time when threats are coming from other places than just Intel. As Intel and AMD look to push their x86 technology down the ladder into such devices as tablets and smartphones, a growing number of chip makers – such as Marvell and others, who use low-power processor designs from ARM Holdings normally found in mobile devices, and Tilera,which is developing its own chips – into the data centre. ARM chief executive Warren East said last month that he expects his company will be able to challenge Intel chips in the data centre by 2014.

Thomas Siefert, senior vice president and CFO, will serve as interim chief executive while a search committee looks to find a replacement for Meyer.

King said the company will probably look for a more dynamic person than Meyer. He pointed to Intel’s Otellini, who he said is good at bringing Intel’s message to the industry.

“He can talk about that [technology] in a way that is compelling to any audience,” King said.