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I don’t usually pay much attention to corporate executives and the hirings, firings and resignations thereof. It’s not that executives are unimportant, it’s that they’re not exactly what I’m passionate about. While I never pass up an opportunity to meet with an exec, I generally walk away more impressed after a conversation with a Fellow.

 

Today’s resignation of AMD’s former CEO Dirk Meyer seemed like reason to pay attention. It wasn’t a scandal or anything vile that led up to the resignation, just a good old fashioned differing of opinion. To quote AMD’s press release:

”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.”

The implication being that Dirk’s plan for AMD wouldn’t result in significant growth, establish market leadership and generate superior financial returns. The question is what was Dirk’s plan and what direction does AMD’s Board of Directors believe it should be headed in instead?

Dirk Meyer has been nothing but good for AMD since he took control in 2008. As AMD points out Dirk successfully spun off Global Foundries (the industry as a whole may owe him thanks for that as it seems to be gearing up to be a major player in the future of chip manufacturing). In doing so Dirk also floated a sinking ship—AMD managed a return to profitability under his watch. We’re also on the cusp of AMD’s most active year ever. Brazos just launched and we’ll get both Llano and Bulldozer before the year is out. When was the last time AMD launched three different architectures in a 12 month period? Never, that’s when.

So what wasn’t Dirk prepared to do? AMD still doesn’t have a public ultra mobile (read: smartphone) strategy, but would that be enough to resign over? I don’t have any reason to believe that Bobcat wouldn’t eventually be folded into a smartphone SoC. AMD typically lets Intel open up a new market and then follows it in as an alternative. I suspect it’s a safer bet to let Intel duke it out with ARM for control of the smartphone market before deciding to enter. Based on the outcome there, AMD could choose to enter under either the x86 or ARM banners.

I was talking to Ryan Smith earlier tonight when the news broke and he mentioned something that caught my interest:

“Mark my words, at some point they're going to try to sell the company to ATIC. Let ATIC deal with fighting Intel, and the board/investors can pocket a nice profit. Certainly if you were trying to sell, you'd sack Dirk. He doesn't seem like the kind of guy that would let them do it.”

This is just one of the many reasons I love working with Ryan—he always looks at things at an angle I hadn’t previously considered. ATIC, the company funding Global Foundries, would be a good suitor for AMD. It has the resources to fund a fight with Intel as we’ve already seen from Global Foundries...oh, and it also happens to own a number of microprocessor fabs that conveniently are very well suited to manufacturing AMD microprocessors.

Obviously everything here is pure speculation. While Dirk saved AMD from extinction, the press release seems to indicate he wouldn’t be the right guy to take AMD to the point of making tons of money. With Intel executing as well as it has been, I’m not sure if a change in CEO will be enough to fix that. AMD needs an influx of revenue to fund the sort of projects it needs in order to gain significant market share. 

To be honest, I don’t know Dirk personally and I don’t know why he’d choose to part ways with AMD. Changes like this are usually the result of something significant however. We’ll probably find out the answer in the next 24 months.

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  • Sahrin - Monday, January 10, 2011 - link

    Given the board's willingness to fire Dirk, I have to agree with Ryan's suspicion that there is "more to it" - after all this is the same board that stuck with Hector "Fraudrigo" Ruiz for waaaay too long while he ran the company into the ground versus Conroe.

    That said, I think you're overestimating the willingness of the House Committee on Commerce to allow this deal to go down. One of the reasons that AMD's voting interest in GF is still so powerful is to appease the "no export" crowd on the right side of the capitol (and don't get me wrong, there are realistic concerns about sending cutting-edge process technology and control thereof to Dubai). Look what happened with Dubai World, and that was just a port operator.

    I'm not convinced that there is "more to it" though. You have to admit that while execution under Dirk has been much improved versus Hector, it's nowhere near the level of nVidia or Intel. Another angle is that AMD is now flush with cash, and the board is unimpressed with the ROI achieved since the company has become more liquid (and that constraint has been lifted). They're seeing a lot of upside in the GF investment (remember, AMD still owns a good chunk of GF) - ironically AMD is the weak link in AMD's portfolio (ATI is the strong piece of the design house).

    Still, I think the announcement of "wanting to be more agressive" makes sense. Dirk was a very good CEO, but if AMD wants to be anything more than Intel's second banana for the next 10 years, they're going to need to step it up - and the one thing that Dirk has not been is agressive.
    Reply
  • vol7ron - Tuesday, January 11, 2011 - link

    What? Just because you have $$, doesnt mean you can create a miracle over night. Reply
  • Tormeh - Tuesday, January 11, 2011 - link

    I think that's exactly what it means. Reply
  • taltamir - Wednesday, January 12, 2011 - link

    or rather, exactly what they BELIEVE it should mean.

    Dirk took a failing company, made it profitable and have cash. That sounds like a keeper. He tells them that he can't pull a miracle out of his ass and they fire him... To be replaced by someone like hector ruin who will promise them the sky and deliver the company unto its deathbed.

    Trying to sale to the Government of Abu Dhabi (ATIC) is exactly the kind of thing I'd expect from them (what with GloFo), and is possibly what they WANT to happen, but that has to get the approval of the US government, and its not necessary going to happen.
    Reply
  • Mishera - Saturday, January 15, 2011 - link

    Don't Know where you guys got the idea that Amd has cash. Look at the balance sheet. Amd has a lot of notes due over the next couple of years and from what it looks like will be in a relatively tight financial position. Amd has cut a lot of it's research investment too which makes the bobcat that much more impressive

    I'm inclined to believe that investors are either upset about the lack of an attempt in the cellphone/tablet market or they want to sell the company, which would make sense as the first statements said he didn't "generate enough return to investors".
    Reply
  • vol7ron - Tuesday, January 18, 2011 - link

    Hmmm I'll come back and post after his statement regarding the Board of Directors and act like I had more intuition about what this article said.

    ... so it came to be that BoD wants to move the company towards more of the mobile market, which Dirk didn't seem to be doing enough of. Sigh

    BTW AMD has notes, but the huge Intel settlement helped.
    Reply
  • bah12 - Tuesday, January 11, 2011 - link

    Correct me if I'm wrong but wasn't there specific clauses in the Intel/AMD settlement that prevented the transfer of the x86 cross license in the event of a buyout. Without that license AMD becomes far less attractive IMO.

    Although I agree that something more is going on, I don't know that a buyout is it. Of course my memory is not as sharp as it used to be so I could be wrong.
    Reply
  • JGabriel - Tuesday, February 15, 2011 - link


    Not only that, but I'm not sure ATIC would be a potential buyer for AMD. Ryan's right that AMD's Board may hope for ATIC as their big payday, but what's in it for ATIC?

    ATIC may well be better off staying out of the chip design / architecture business, so they can at least maintain the illiusion of fab neutrality for their other clients. Owning both a chip designer and a set of fabs won't be very reassuring to that chip designer's competitors.
    Reply
  • Sabresiberian - Tuesday, January 11, 2011 - link

    Not sure what an "aggressive" CEO looks like, but Dirk seems to have done a lot in 2 years.

    ;)
    Reply
  • sprockkets - Monday, January 10, 2011 - link

    Typical shareholders. Dirk was such a good long time AMD employee. But as it stands, what is left anyhow? They spun off the division that made the graphics in ARM devices some time ago, and the writing is on the wall for x86 based devices. Reply

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