Under Meyer, directors were frustrated with AMD’s lack of progress in gaining market share and entering the tablet- computer industry, according to people familiar with the board’s deliberations. The company announced yesterday that Meyer has resigned and that it’s formed a committee to find a successor.
“They need a visionary,” said Hans Mosesmann, an analyst at Raymond James & Associates in St. Petersburg, Florida. He has a “market perform” rating on AMD stock. “They need someone who has the passion to disrupt the market.”
The next CEO will continue a 40-year struggle to escape from the shadow of Intel, the world’s largest chipmaker. AMD has less than 20 percent of the global personal-computer processor market, compared with Intel’s 80 percent, and its revenue in 2009 of $5.4 billion was a seventh of Intel’s.
AMD -- founded in 1969, a year after Intel -- replaced the 49-year-old Meyer with Chief Financial Officer Thomas Seifert, who will serve as interim CEO. Seifert, 47, has bowed out of contention for the permanent job.
AMD fell 83 cents, or 9 percent, to $8.36 at 4 p.m. in New York Stock Exchange composite trading. The shares tumbled 15 percent last year.
‘Path to Ruins’
The power vacuum isn’t likely to make the company vulnerable to a takeover, said Daniel Berenbaum, an analyst at Auriga USA in New York.
“I don’t see any natural acquirer,” said Berenbaum, who recommends selling the stock. “It’s pretty clear their product road map still lags Intel and their execution lags Intel.”
Another possible impediment to a deal: The government of Abu Dhabi owns a 15 percent stake in AMD.
Meyer, who succeeded Hector Ruiz as CEO in 2008, reduced debt and stemmed losses. The Sunnyvale, California-based company also resumed delivering chips on schedule after earlier product delays cost AMD orders.
“Two years ago, they were in significant trouble,” said Patrick Wang, a New York-based analyst at Wedbush Securities. He has a “neutral” rating on the shares. “The company was on a path to ruins. What they’ve done since then is phenomenal.”
In addition to stepping down as CEO, Meyer resigned from the board. The move capped a 15-year career at AMD, following stints at Intel and Digital Equipment Corp. His departure wasn’t the result of any specific financial or legal matter, said Drew Prairie, an AMD spokesman.
Ruiz left AMD in 2009 to become chairman of a spinoff called Globalfoundries Inc., which was formed out of the company’s manufacturing operations. He later was linked to the Galleon Group LLC insider-trading case, a person familiar with the matter said in October 2009. Government prosecutors found that he provided nonpublic information on the transaction that created Globalfoundries, the person said. Ruiz wasn’t named in government papers and wasn’t charged.
Analysts were surprised at Meyer’s exit, just two years into his term as CEO. Meyer represented AMD at a press conference last week at the Consumer Electronics Show, where he faced questions about the company’s strategy for cracking the tablet market. The success of Apple Inc.’s iPad has increased pressure on AMD to field a chip for tablet devices. The iPad relies on a mobile-phone processor with ARM Holdings Plc technology.
Meyer said there was plenty of room for AMD to grow in laptops, and that tablets wouldn’t cannibalize those sales.
Company directors wanted to see quicker results.
“The board believes we have the opportunity to create increased shareholder value over time,” AMD said in a statement yesterday. “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.”
At a board meeting several months ago, Meyer and his team presented a strategic plan that the directors decided wasn’t going to bring the changes needed fast enough, said people familiar with the discussions. They asked to remain anonymous because the board’s meetings are private.
“My blood will always be green,” Meyer said yesterday in an e-mailed statement, referring to the color of AMD’s logo. “I wish the company well as AMD focuses successfully on the road ahead.”
AMD posted declining sales in three of the previous four years. Analysts estimate that revenue climbed about 20 percent in 2010.
Whoever replaces Meyer is going to have to do more than take on Intel, said Raymond James’s Mosesmann. To enter the tablet market, it will have to compete with mobile-phone chipmakers, including Qualcomm Inc., Texas Instruments Inc. and Broadcom Corp.
“The battle now changes -- it’s not just Intel,” he said. “The board of directors has a huge challenge.”
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