Partners React With Shock To Reports On AMD's Ruiz

Some were shocked and others expressed world-weary cynicism about the reported role of former Advanced Micro Devices CEO Hector Ruiz in the Galleon insider trading case, but AMD channel partners generally downplayed any negative impact on their business dealings with the company.

Ruiz was identified Tuesday by The Wall Street Journal as the unnamed "AMD Executive" cited in criminal complaints filed against six defendants charged with conducting an alleged insider trading conspiracy that stretched from Wall Street to Silicon Valley. Ruiz has not been charged in the case involving defendants from technology giants IBM and Intel, in addition to the billionaire founder of the Galleon hedge fund and traders from the New Castle Partners hedge fund.

A spokesman for Sunnyvale, Calif.-based AMD said Wednesday that the company was "actively investigating" the situation and that "[i]t would be inappropriate to comment further on an ongoing Department of Justice investigation."

"Wow -- that's my reaction," said Dom Daninger, vice president of engineering at Nor-Tech, a Burnsville, Minn.-based builder of custom computer systems. "I hadn't realized that the tentacles of this thing went that far to involve so many companies."

Shock was also the reaction of a source at a Bay Area-based system integrator who asked not to be named. Like many of his peers, the source does business with both AMD and its larger rival, Santa Clara, Calif.-based Intel.

"It was mind-boggling actually," the source said Wednesday, a day after the news of Ruiz's alleged role in the insider trading case broke. "But at least it's better to appear in The Wall Street Journal than the National Enquirer."

Jon Layish, president of Red Barn Technology Group in Binghamton, N.Y., had a "been-there, seen-that" attitude towards the news.

"[Insider trading] is just such a dumb thing to get involved in," he said. "I can't believe that people would get involved in this sort of thing and think that no one is watching these days. But I'm not surprised that insider trading like this is still going on. Are you surprised that there might be a couple of idiots in a few companies with thousands and thousands of employees?"

Layish said that despite the headline-generating fireworks, he believed the Galleon case wasn't likely to do much long-term damage to AMD or other high-tech companies implicated in the scandal.

"I don't see this having a huge effect on the industry. It's just a couple of people, so I can't see this affecting the companies involved very much. I'm sure it will be business as usual and these companies will move on," he said.

That was a sentiment seconded by the Bay Area-based source, who said that "from a system integrator's point of view, in terms of product we're likely to buy, it's irrelevant to us." But that source also guessed that this particular investigation could be far from over.

"This is not going to end here. It's an old boys' network and nobody knows how deep it goes," he said.

Meanwhile, Nor-Tech's Daninger said the Galleon scandal likely wouldn't affect his company's business dealings, but that he was personally dismayed by the extent of the alleged conspiracy.

"On a personal side, I'm losing trust in the stock market. It just seems like there's an element that's so susceptible to manipulation," he said. "This is just another piece of evidence that shows that's true and that the regulators don't have a handle on this kind of behavior. I just don't feel like it's safe out there for a small investor."