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It's No Rumor: AMD CEO Dirk Meyer Resigns 18 Months In

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News Posted: Tue, Jan 11 2011 12:39 AM
This afternoon, AMD announced that its current CEO, Dirk Meyer, would be resigning immediately. Dirk, who took the helm of AMD on July 18, 2008, has guided the company through the difficult 18 months since. As AMD's Board of Directors notes, "Dirk became CEO during difficult times.  He successfully stabilized 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."

What makes this situation unusual are all the things AMD doesn't say. The press release neither gives reason for Meyer's departure nor explains why Dirk is being ousted immediately after launching the Fusion APUs first envisioned by his predecessor. The board's statements, however, do hint at a potential disagreement between the former CEO and the rest of his colleagues. Immediately after praising him for his achievements above, the document states:
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.
An Odd Choice of Words

To explain the strangeness of that statement we have to delve into the past. Meyer came to AMD in 1996 along with a team of engineers from the dying company DEC. Meyer led the K7 design team and was therefore credited for the processor that literally saved the beleaguered manufacturer from collapsing under Intel's weight. The company promoted Meyer to head of the Computation Products Group in 2001, made him a senior vice president in 2002, and appointed him its Chief Operating Officer (COO) from 2006-2008.


Here's where it all began—AMD's original Slot A K7 Athlon, built on a 180nm process

When Meyer finally took over as CEO, he replaced Hector Ruiz. Ruiz had guided AMD through some of its greatest successed but had also officated some of its greatest missteps and failures. It was Ruiz who masterminded the plan to spin AMD's manufacturing off as an indepedent business, but the older CEO was swept out of office after Sunnyvale posted its seventh straight quarterly loss. When Meyer ascended, he was painted as the perfect candidate to clean up Hector's mistakes, put the company back in the black, and finish the much-delayed Bulldozer and Bobcat. As far as we know, that's exactly what he's done.

After 14 years of positive perception, 18 difficult (but successful) months as CEO, and with AMD's radical new architectures just half launched, Meyer—the chief architect behind the CPU whose basic design has powered every AMD processor from 1999 through 2010—is out without even a cursory explanation.

The Dubious Merits of Increasing Shareholder Value:

It's possible that Meyer's departure was caused by events of which we are currently unaware, but the BoD's earlier statement implies that it and Meyer profoundly disagreed on AMD's course. If we had to guess, we'd bet that the board, already frustrated over AMD's inability to capitalize on the netbook craze from a few years back, is similarly peeved that it didn't have tablet products ramping over the last six months. While netbook/notebook Fusion parts are already shipping, tablet versions of those processors won't be ready until the end of Q1; we may not see AMD push into the tablet market until back-to-school 2011.


Here's where we are now, but Zacate and Ontario still have to prove themselves in a crowded, Intel-dominated market

The problem we have with our own prestigious prognostications and clairvoyant cogitations is that they don't make much sense. Tossing Meyer because AMD didn't have netbook/tablet class processors available earlier or for not aggressively planning to ramp tablets now would be an enormous mistake. The initial netbook explosion took even Intel by surprise and, as we've commented before, was only possible because Santa Clara had specifically designed a new processor from the ground up. AMD had nothing that could match Atom's power consumption and sensibly opted not to try. The fact that the netbook market caught like a magnesium flare only to shrink dramatically in 2010 (again catching Intel offguard) is further evidence that Meyer made the right choice when he opted to play the interim period from 2008 to the present day slowly and carefully.

AMD made a critical mistake in 2005 by assuming that flattening Prescott and the Netburst architecture was the same as flattening Intel. While Sunnyvale chased ATI and brokered what was possibly the worst deal in its own history, Santa Clara was busy with the first iteration of the Core architecture. AMD's board makes noise about improving shareholder value, generating superior financial returns, and establishing market leadership. It sounds good, but it's ominously familiar and out of synch with the reality of where the company stands today.

What AMD needs to focus on is staying solvent and launching Bulldozer and Llano while carefully architecting its next-generation CPUs and GPUs. Hopefully Meyer's replacement realizes that as well. If he doesn't, things could get very ugly, very fast.
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3vi1 replied on Tue, Jan 11 2011 8:08 AM

So sad to see someone let go into this job market, with nothing but severance and a golden parachute worth tens of millions of dollars.

I smell sex scandal in 3... 2... 1...

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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This guy was the heart and soul of AMD on the tech side for a very long time. Cutting him like this is just stupid.

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Joel H replied on Tue, Jan 11 2011 10:28 AM

3vi1,

I'm as cynical about CEO parachutes and pay as the next guy, but Meyer has been a major force at AMD for years and has always been considered one of the good guys. If there was a sex scandal brewing, we'd have probably seen remarks along the "...has retired to spend more time with his family" line.

I'm guessing at the reason for Meyer's departure but I firmly believe he took the right strategy with AMD's product portfolio. A company that's losing money hand over fist simply can't afford to aggressively pursue every single market, particularly when it's a full process generation behind its chief competitor.

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realneil replied on Tue, Jan 11 2011 9:26 PM

OK AMD,....chin-up and keep on keeping on!

Hu-ya!

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rapid1 replied on Thu, Jan 13 2011 12:41 AM

"Dirk Meyer had been making an annual salary of $950,000, plus a "target" annual bonus of $1.9 million, according to Veritas Executive Compensation Consultants LLC. They estimate that his severance package was $8.55M USD in cash. An AMD spokesperson, Drew Prairie, gave a slightly higher estimate of $18M USD."

Ok 1 comment here I want to know when as well as where 9.5 Million USD is slightly more I would love to have a 1/4 of that, so if it is so slight why won't someone just cut me off a slice of cheese too please.

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rapid1 replied on Thu, Jan 13 2011 12:45 AM

This man is basically the mind behind Athlon XP, Phenom, 6 core, fusion, Bulldozer and Opteron as well as all there recent corporate chips, and has been running at least as the CEO, development of ATI product roadmaps etc as well as all those previous processor lines for quite some time. I think they really just killed there golden Goose here because they could not wait for gold as they got hungry at a board meeting.

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gibbersome replied on Thu, Jan 13 2011 11:04 AM

Earnings for 4th quarter are about to be released on Jan 20th, perhaps this was a preemptive move to appease the impending shareholder anger. I would stay away from AMD stock until the earnings are released.

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realneil replied on Thu, Jan 13 2011 8:11 PM

gibbersome:
I would stay away from AMD stock until the earnings are released.

 

Ok, done,.........Big Smile

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