AMD chief is out after latest loss
Advanced Micro Devices Inc. Chief Executive Hector Ruiz, the tech industry’s most prominent Latino CEO, was forced out Thursday after the chip maker posted a loss for the seventh consecutive quarter.
Ruiz, 62, replaced founder Jerry Sanders six years ago to become only the second CEO of Advanced Micro. He will be replaced by Chief Operating Officer Dirk Meyer but will remain on the company’s board as executive chairman.
The Sunnyvale, Calif., company is the world’s second-largest maker of microprocessors. During his tenure, Ruiz helped Advanced Micro become a stronger competitor to sector leader Intel Corp., which manufactures roughly 80% of the world’s PC chips.
But the company has been dogged with problems recently. In 2006, it bought ATI Technologies Inc., which makes graphics cards, for $5.6 billion, and later had to write down the value of the purchase after the acquired business units under-performed. Advanced Micro delayed the launch of its new Opteron server chip in late 2007, hurting its competitiveness with Intel, and it laid off 10% of its workforce, or 1,800 employees, this year.
On Thursday the company reported a second-quarter loss of $1.2 billion, or $1.96 a share, larger than the $600-million loss it reported in the same period last year. Its shares rose 4.7% to $5.30 after the earnings report but fell 7.5% to $4.90 in extended trading.
Some analysts expect more bad news. Craig Berger, an analyst with Friedman, Billings, Ramsey & Co., wrote to clients that demand for personal computers might slow in the third quarter because of the weak economy. Advanced Micro’s $5 billion in debt makes the future bleak, he wrote, because it “now finds its ability to invest in next generation processes and fabs is limited.”
Advanced Micro scored a victory Thursday when the European Union’s antitrust regulator accused Intel of thwarting competition by offering discounts to major retailers for not offering computers with Advanced Micro’s chips. The EU expanded its antitrust investigation of Intel, which Ruiz had urged it and other courts to do.
New CEO Meyer, 48, previously led Advanced Micro’s microprocessor division. He inherits the company’s debt but also two promising new products slated to come out this year: The Puma notebook platform, for high-end computers, and its “Shanghai” 45-nanometer quad-core chips.
The products look competitive, said Doug Freedman of American Technology Research, leading him to believe that company might begin to turn itself around.
“You don’t want to put the new guy in without a light at the end of the tunnel,” he said. “They see the light.”
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