AMD Partners Concerned With Leadership Vacuum

Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder, says the lack of leadership at AMD does not impact his business day-to-day, but it could negatively affect AMD's roadmap and long-term strategy.

"I certainly believe that when there is a void in leadership it affects the entire company and there is a trickle-down effect. I'm sure everyone who partners up with AMD would be happier if there was solid leadership in place," he said.

An AMD spokesperson said Thursday the company is still searching for a replacement but declined additional comment.

Former AMD CEO Dirk Meyer resigned in January after reaching an impasse with the board of directors over the direction of the company. According to reports, AMD's board was concerned that the company had failed to gain CPU market share under Meyer's watch and also lacked a presence in the tablet market.

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A new CEO could help, but the problems at AMD go beyond the loss of executive leadership, said Larry Piland, president of Datel Systems, a San Diego, Calif.-based solution provider.

"They've lost so much momentum and mindshare that they don't seem to be part of the conversation anymore," Piland said. "AMD just doesn't come up [in customer discussions]. Five years ago they were in the conversation but now no one is asking about them."

However, analyst expectations for AMD's earnings call Thursday contradict this view. On average, analysts surveyed by Bloomberg News predicted net income of $49 million for AMD's second quarter on earnings of 7 cents per share. For the full year, analysts are forecasting earnings of 96 cents per share, which would be AMD's highest annual net income since 2000.

The ongoing CEO search will not overshadow improved earnings in the short term, but a long-term lack of leadership could be bad for business, according to Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based system builder.

"Investors will eventually want someone to define the future strategic direction," said Tibbils.

AMD offered the CEO spot to several industry executives, including Oracle Co-President Mark Hurd, EMC's Chief Operating Officer Pat Gelsinger and Carlyle Group Managing Director Greg Summe, but none were interested in the position, Bloomberg reported in June.

AMD's Q1 net income was $510 million, nearly double that of the previous year's quarter, and that was due in part to the launch of its Fusion APU platform, Thomas Seifert, interim CEO, said in April. AMD began shipping these processors in November.

About half of AMD’s notebook products that shipped in the first quarter were Brazos processors, the low-power APU platform that includes both Ontario and Zacate integrated graphics processors, Seifert said at the time. He also said AMD continued its lead in discrete graphics over the first quarter, citing Apple’s adoption in February of AMD Radeon graphics cards in its Macbook line.

Analyst's projections for the second quarter earnings reflect ongoing confidence in APU sales. Erik Stromquist, COO of CTL, a Portland, Ore.-based custom system builder, even joked that AMD should maintain the status quo. "They seem to be doing better now without a CEO in terms of their earnings. Maybe they should stick to this no CEO program," he said.