AMD System Builders Question Meyer's Resignation As CEO

AMD's Chief Executive Officer Dirk Meyer resigned unexpectedly from his position on Monday, leaving behind several unanswered questions regarding the circumstances of his departure.

Although AMD said Meyer resigned, the company's ensuing statements on the matter suggest that he may have been pushed out.

’The board feels we’ve got opportunities for significant growth and superior financial returns, and a change in leadership can accelerate the ability to accomplish those goals,’ Drew Prairie, an AMD spokesman, said in an interview with The Wall Street Journal. ’We’re marching in the right direction, but the issue was just with the pace and finding ways to accelerate the pace.’

AMD's resellers in the channel asked whether a change in leadership will translate to AMD achieving its goal of gaining a larger share of the market.

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"It is very hard to say from an outsiders view if this change will have any impact," said Larry Piland, president of Datel Systems, a San Diego, Calif.-based solution provider. "Is it a CEO issue that has kept AMD from realizing their full potential or is it a board issue that steers the company in a given direction?"

According to a report from Bloomberg on Tuesday, AMD is seeking a CEO who can challenge Intel in the traditional CPU market, while getting AMD processors inside mobile embedded devices. The report said AMD's board was frustrated during Meyer's tenure with the company's inability to gain market share in the tablet segment in particular.

Piland said that for AMD to increase its sales figures it may need to revise its strategy, rather than just its leadership.

"It is also possible that it is too late in the game for AMD to become the player in the CPU market that would expand their sales in great numbers," said Piland. "Their reliance on 3rd party companies to make mother boards and control boards (with some substandard results) has kept many people from standardizing on AMD chips whereas Intel had been making boards for years that the market trusts and can rely on."

Among the limitations of AMD's current strategy, Jon Bach, president of Puget Systems, a Kent, Wash.-based system builder said that the company hadn't taken advantage of the opportunities that the system builder channel offers.

Next: AMD's Attitude Towards The Channel

"AMD has a lot of untapped potential with system builders," Bach said. "While Intel and Nvidia are asking 'How can we help you sell our product?' AMD waits for us to approach them, and then says 'We won’t help you until you sell a bigger share of our product.' It is an incredible turn-off, and it is an experience I hear echoed by many other system builders, and even distributors.'

Bach indicated that system builders who had dealt with the problem had hoped that replacing an individual, as AMD's board has done with Meyer, would solve the problem, but found that the issue lies deeper within AMD.

"For a time, we thought it was simply a poor sales representative assigned to us," Bach said, "but as we dig deeper we find it is more of a company culture issue within AMD. I have to admit, as unlikely as it is, my first thought is: maybe their new CEO will want to address that."

Others who offered a more approving opinion of Meyer's performance as AMD's CEO were unsettled by Monday's news.

Wedbush analyst Patrick Wang told Marketwatch on Monday that Meyer’s resignation from AMD was ’shocking’, touting Meyer's role in turning the company around.

’It’s an interesting time to see Dirk exit the company, particularly as he helped dig shares out of the $2 neighborhood just two years ago,’ Wang told Marketwatch.

According to Wang, Meyer's success continued beyond his initial handling of a difficult period for the company, and lasted until his inexplicable dismissal on Monday.

’Just over the last few quarters, we’ve seen AMD’s execution really begin to coalesce,’ Wang told Marketwatch. ’Perhaps we’ll never know exactly why the Board didn’t see the potential in Dirk.’