Many restructuring programs are met with cheers of approval. Making tough decisions to right a sinking ship shows chutzpah, and there are often cost savings to reap in massive job cuts. Cisco Systems (Nasdaq: CSCO) got upgrades and share-price jumps out of a grand restructuring last spring. Banks are resorting to job cuts by the bushel, and bank-sector ETF SPDR KBW Bank (NYSE: KBE) has actually outperformed the Dow Jones Industrial Average (INDEX: ^DJI) over the last month as investors hailed these drastic moves.

Your mileage may vary
Advanced Micro Devices (NYSE: AMD) isn't reaping those market rewards today.

The stock is down more than 3% in early trading, following a freshly announced restructuring plan. In AMD parlance, the company "optimizes cost structure to enhance competitiveness and accelerate growth." About 12% of AMD's total workforce -- 1,400 employees -- is heading out the door. The slashing action should cause savings of something like $200 million in 2012. AMD will now "stake leadership positions in lower power, emerging markets and the cloud," says recently appointed CEO Rory Read.

But investors aren't buying the story and neither am I.

The way I see it, cost-cutting and big innovation are two very different and largely incompatible goals. Read claims that savings from the cuts will allow AMD to invest more in the three strategic areas outlined above, which sounds great in theory. More detail on the specific tactics will come next week as Read does his quarterly all-hands webcast.

The cuts go both high and low, including a massive evisceration of AMD's top PR and marketing executives. Rory Read may have remade the paid staff in his own image now, but he can't (and probably wouldn't, anyway) boot any of the board members who hired him. That job falls to shareholders when the next annual proxy drops into their mail boxes.

Where the cuts aren't
The board has now arrived at the third CEO in four years, and got rid of the one leader who seemed to know what he was doing. That decision has hardly paid off so far: AMD shares are down 32% in 2011 while archrival Intel (Nasdaq: INTC) has gained 15% and ARM (Nasdaq: ARMH) jumped even higher. I used to be a shareholder, but lost my trust in the board when Dirk Meyer got his walking papers, and the company hasn't done anything to earn it back. So I took my investment dollars elsewhere.

The nominating committee consists of seven out of AMD's 11 board members. Corporate governance champion Nell Minow insists that bad boards and clumsy committees need to be held accountable for their decisions, so these are the names whose re-election votes at the next annual meeting should come in very light:

  • Bruce Clafin, Chairman of AMD and of the Nominating and Corporate Governance Committees
  • Robert Palmer, Lead Independent Director
  • Paulett Eberhart, Chairwoman of Compensation Committee
  • W. Michael Barnes, former CFO of Rockwell Automation
  • Craig Conway, former CEO of Peoplesoft
  • John Caldwell, former CEO of SMTC
  • Henry Chow, ex-CEO of IBM (NYSE: IBM) China

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