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AMD Dumps CEO, Starts Search for New Head

{complink 103|Advanced Micro Devices} stunned shareholders and customers Monday, Jan. 10, with the news president and CEO Dirk Meyer had resigned with immediate effect. (See: AMD CEO Resigns.)

The company said CFO Thomas Seifert had been named to act as CEO in an interim capacity while it engages in what will likely be an interesting and exhaustive search for a substantive head at the microprocessor and graphics semiconductor vendor.

Seifert who has been with AMD for less than two years “has asked not to be considered for the permanent CEO position,” the company said in a statement.

This development does not sound like an amicable parting of ways, although AMD was trying to put its best spin on it. The company thanked the departed CEO for his services, and board chairman Bruce Claflin said Meyer “successfully stabilized AMD while simultaneously concluding strategic initiatives including the launch of {complink 12822|GlobalFoundries Inc.}, the successful settlement of our litigation with Intel and delivering Fusion APUs to the market.”

Companies typically do not dump a successful CEO just before announcing quarterly results, so something must have happened recently that resulted in Meyer being pushed out. The statement from AMD hints at why it forced Meyer out. The board of directors, it seems, does not believe Meyer is the right person to lead AMD as it struggles against {complink 2657|Intel Corp.}, the No. 1 microprocessor vendor. Claflin explained it this way:

    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.

Experts in management changes will agree this is only half the story. AMD's board of directors must have had a clash over strategy with Meyer — this is pure speculation on my part, but I believe the evidence points in this direction. AMD said its fourth-quarter sales were approximately $1.65 billion, up 2 percent sequentially but flat from the year-ago quarter.

By comparison, 2010 fourth-quarter sales at rival Intel are forecast to increase 8 percent to $11.4 billion from $10.6 billion in the comparable 2009 quarter. AMD under Meyer was not, as they say in the industry, firing on all cylinders.

The disagreement must have been serious enough for AMD's board to decide it must immediately let Meyer go. It is also possible that Meyer could have forced the board to take a decision about his tenure at the company. If this had not been a serious disagreement, the company and Meyer would have waited and conducted a more orderly transition to a new CEO.

Investors don't like such rude shocks and in after-hours trading drove down AMD's stock price more than 4 percent to $8.79. The shares had risen slightly during regular trading hours.

I'll be following up later with more analysis of the unfolding events at AMD.

10 comments on “AMD Dumps CEO, Starts Search for New Head

  1. SP
    January 11, 2011

    Definitely not a news AMD wants to be in especially if wants to compete with Intel. The leadership stability is very important for a company's growth but if the vision of CEO and board doesnt match its good to part ways. It would have been better if they had a replacement candidate with proper handshake. This kind of sudden decisions are not good for the employees and the shareholders.

  2. saranyatil
    January 11, 2011

    this  is not the right decision by AMD, coming up with such shocks will definitely create lot of suspicion amoung the share holders and also to start searching for a new head after firing Meyer with out finding the right person. now competition between the semiconductor industry is increasing plus with Intel widening its thoughts definitely AMD should give tougher competition. sales reflects directly on the vision of the CEO this must have been the major reason for his firing. now this has created a Buzz to know who will be the new CEO and to kno his unique vision and startegies.

  3. Taimoor Zubar
    January 11, 2011

    I think it's a very dangerous decision taken by the board which may prove to be very costly for AMD. Even if the board felt that 'AMD under Meyer was not, as they say in the industry, firing on all cylinders', a wise move would have been to bring about a change gradually. The new CEO will firstly have to fill the gap created with Meyer's departure and then possibly bring about any changes in the company. Unless they get an exceptionally dynamic person to replace him who can turn the company around, the decision seems a bad move for AMD.

  4. itguyphil
    January 11, 2011

    This is what happens when board members lose faith in the chief. If there was a vote of no-confidence recently, there is not much 'gradual' change that can be made in the sense of satisfying the Chief Officer's position. The board will now have to make an educated and informed decision about who they beleve can handle the task.

  5. eemom
    January 11, 2011

    While this seems to be sudden for the industry, I would have to believe that it has been in discussion within the board for sometime now.  Boards usually (I say this cauciously) do not make sudden and rash decisions without significant conversation and thought behind them.  Clearly, they did not feel that Meyer was the right person to lead the company moving forward.

    Unfortunately, just letting a CEO go when he is not good standing with the board, may be the only reasonable option.  I am not sure that a gradual transition is possible with that position.  AMD may struggle in the short term with surprising the industry, hopefully, they have a long term plan to recover and help the company get back on track.

  6. Barbara Jorgensen
    January 11, 2011

    This is a serious move in term of timing and leadership. I suspect there is a major conflict over the company's direction, as Bolaji points out. I have personally covered a similar situation at Arrow Electronics when CEO Francis Scricco unexpectedly left the company. No one has ever confirmed this, but I believe Fran's vision and the board's vision differed considerably.

    The fact that this came as such as surprise is a credit to the company that it didn't let this internal conflict leak or go on indefinitely. (I don't think anyone at HP was surprised when Carly Fiorina left.)

  7. elctrnx_lyf
    January 12, 2011

    AMD would have helped itself better by actually finding another CEO before ousting Dirk.  At the time when we are actually talking about AMD new products Fusion APU and Brazo platforms, CEO going out seems to be some puzzle. A big task ahead for the directors is to find the replaceament who can support AMD with right strategirs for the future. Leadership change can result in a big turn around if AMD finds a charming leader.

  8. Mydesign
    January 13, 2011

        The sudden movement from the board of directors of AMD is very much surprising, even without giving the minimum notice period or rethinking chance.  This type of unexpected things are happens when board of directors lost the faith on their CEO or in vice versa. But the time selected to take such a drastic decision is not market favorable. Either the CEO or board of directors has to wait till the announcement of 4th quarter results. I would like to co relate this matter (CEO sacking) with the recent issues connecting to Intel.

        My opinion is to just wait and see, what is going to happen for AMD against the recent issues with Intel. May be from there, we can read out why they sacked their CEO with immediate effect.

  9. hwong
    January 22, 2011

    AMD always have this cycle. It's up for awhile and then down for long time. Hopefully they will bring in someone who knows what direction to take the company and help the company turn around. If you can catch the AMD stock cycle, you can perhaps make alot of money

  10. Himanshugupta
    January 23, 2011

    AMD has always played a catchup game and has not given any serious challenge to Intel. It might be true that AMD's CEO was not firing with all cylinders but he only had 2 year until now and he was not doing a bad job. There must be some serious problems between board and CEO that he was ousted suddenly.

    It will be worth knowing how much money did CEO took home before departure. 2011 has started with major changes at the top in tech giants such as google and apple. how much more is there in store?

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