Who Wants to Run AMD?

"Reap what you sow," they say. But it ain't always that easy.

Just ask former Advanced Micro Devices (NYSE: AMD  ) CEO Dirk Meyer. While holding that job, he sowed the seeds to AMD's current strategy, which seems to be working A-OK. A heap of new chips introduced this week are being heralded as "a real challenge" to mainstream notebook and desktop chips from Intel (Nasdaq: INTC  ) . As an example, a new line of AMD-based Hewlett-Packard (NYSE: HPQ  ) notebooks appears aimed straight at Intel's highest-volume market segment. with a serious marketing push by HP.

This breaks a long spell of AMD occupying the most budget-conscious spaces, while leaving more profitable market slots to its larger competitor. The new Llano chips are souped-up versions of the ultralight chips introduced right around Meyer's ousting, and they represent an important step in the multiyear plan that was designed under his reign. This is the culmination of the long-derided ATI acquisition and the resulting Fusion strategy. But Meyer isn't there to reap the fruits of that labor (though I hear the severance package was pretty nice).

That would be well and good if AMD's board had a successor in mind. As it turns out, the board did -- but the top candidates didn't want the job. Oops.

According to a Bloomberg report, AMD's headhunters have approached former HP CEO and current Oracle (Nasdaq: ORCL  ) co-President Mark Hurd, Carlyle Group director Greg Summe, and EMC (NYSE: EMC  ) COO Pat Gelsinger, hat in hand and a box of chocolates at the ready, only to be rebuffed.

Gelsinger went so far as going on the record: "I said no, and I said no again," he told Bloomberg. Can you feel the love tonight?

Running AMD is a thankless job for sure. Meyer went from strength to strength and was rewarded with a pink slip just as his efforts started bringing AMD's bottom line out of the red and into the black. The new leader would be expected to lead AMD into smartphones and tablets, which Meyer wasn't terribly enthusiastic about doing. But then you're trading a single huge competitor against a gaggle of firmly established players from Texas Instruments to Qualcomm (Nasdaq: QCOM  ) -- not to mention familiar old bugbear NVIDIA (Nasdaq: NVDA  ) .

Does that space really need another hopeful competitor when AMD could simply focus on taking share from Intel in its traditional markets? I think not.

As a contrite AMD shareholder, I wish whoever takes the job the best of luck -- with pleasing the board more than refining Meyer's road map.

Don't miss a second of the AMD drama! Add the stock to your Foolish watchlist for an up-to-the-minute connection to news and Foolish analysis of AMD and its stock.

Fool contributor Anders Bylund owns shares of AMD and has written puts on Intel but holds no other position in any of the companies discussed here. Yeah, you can play both sides of famous rivalries. The Motley Fool owns shares of Texas Instruments, Qualcomm, EMC, and Oracle. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of NVIDIA and Intel, as well as creating a diagonal call position in Intel and writing puts on NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (6) | Recommend This Article (4)

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  • Report this Comment On June 17, 2011, at 3:09 AM, Brettze wrote:

    Who wants to take over AMD? This is more like it if AMD is very successful with its Fusion chips and taking market share from Intel. Then eveyone will know that AMD will need a deeper pocket to help it with keeping up with Intel's die shrink chuggalo. Also, AMD need to be to command similiar pricing levels with Intel to maximize profits, too. Computer performance based on AMD's Fusion chips is still unknown and unseen as we will know more very shortly. it has been under tight wraps that makes me wonder whether Fusion chips is going to dazzle millons of laptop buyers or not.

  • Report this Comment On June 17, 2011, at 5:59 AM, TMFZahrim wrote:

    @Brettze, the reviews are already in. One example:

    http://www.anandtech.com/show/4444/amd-llano-notebook-review...

    As for the takeover, here's what I think:

    http://www.fool.com/investing/general/2011/02/15/is-amd-for-...

    Also, you seem to forget that AMD is a fabless chip shop now. Manufacturing has been separated from chip design for two years now, so I'm not sure how a rich buyer could do much about the "die shrink chuggalo." (Great name, BTW!)

    Anders

  • Report this Comment On June 17, 2011, at 11:59 AM, Brettze wrote:

    I know that AMD is a fabless one now as Global Foundries is making chips for AMD . Global Foundries should be better able to keep up with Intel on the die shrink chuggalo than AMD can . It might all depends on AMD's ability to grow market share or at least get good prices for its chips in the future. If Fusion chips is a wild success with future chips following on, I dont see why GF can not start the same die shrink chuggalo Intel is doing. As matter of factly, I am rather befuddled about AMD's inability to grab a much larger server market than 7% now.. Only 7%?? What are the IT guys really thinking ? I dont think they know what they really need besides just playing it safe with far more costly Intel Xeons and stuff.

  • Report this Comment On June 17, 2011, at 12:03 PM, Brettze wrote:

    Another thing, AMD is cramming a $100-$300 discrete level graphics into its Fusion chips while Intel is probably using " $29.95 " cheap, puny, special discrete graphics into its SandyBridge chips. Intel still gets away with higher prices than AMD.. What does it tell you?

  • Report this Comment On June 20, 2011, at 4:05 PM, dukenu wrote:

    The power efficiency of the accelerated processing unit (apu) really makes a difference in battery life and as soon as consumers realize that ati/amd is the brand that gives them this, market share will go up. Its not just battery life, the integrated graphics do make a difference in peoples ability to play hd video and directx 11 games especially. It offers entry level gaming on even new pc titles...something only much higher priced labtops could do. The weak spot is the cpu component, but it will shortly get the new bulldozer core which will bring it closer to the icore intel brand and then, well i'm guessing market share might skyrocket to 40% in the low to middle range labtop/netboot segment. I'm not too sure about the desktop segment, people don't trade raw power of discrete graphics there--only as a trade off for portability do they go with a laptop.

  • Report this Comment On June 28, 2011, at 9:31 PM, austec wrote:

    Brettze,

    Intel pays 6-billion dollars to Dell (illegal monopoly bribes) for exclusivity.

    Intel also paid IBM 120 MILLION dollars (according to subpoenaed evidence in the NY AG case) to have IBM drop AMD products.

    So... Intel pays a lot for its chips.

    Intel deserves to charge more, as they spend more money on monopolistic bribes to OEMs.

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