AMD today hit Wall Street with a one-two punch. It lost a stunning $1.19bn during the second quarter. And it nudged Hector Ruiz out of the CEO role, replacing him with longtime planned successor Dirk Meyer, who has been President and COO.
Already very depressed, AMD's shares dropped close to 10 per cent in after-hours trading as investors reacted to the shock of a loss even more dramatic than pessimistic analysts had feared. The $1.19bn loss compares to a $600m loss in the same quarter last year. Meanwhile, AMD's revenue rose 3 per cent year-on-year to $1.35bn.
During an earnings call with analysts, AMD revealed Ruiz's departure, noting that he'll stay on at the board's request as an Executive Chairman. Meyer immediately becomes CEO.
"The time is right," Ruiz said, of Meyer's ascension.
Although, many AMD watchers would claim that the company could have benefited from Ruiz bowing out much sooner. AMD has been plagued by horrific product delays and the acquisition of ATI, which cost AMD $880m in charges this quarter.
AMD's critics may wonder if Meyer is the right man to take over. He's a respected chip expert and knows AMD well, but this is also the guy who has been President and COO during AMD's most recent struggles.
"We have not been living up to (our) potential," Meyer said. "Looking forward, we will.
"We will demand a pattern of sustained profitability."
AMD continues to say it will return to profitability in the second half of this year.
"We will execute, execute and execute," Meyer added, perhaps scaring the hell out of AMD's employees.
During the second quarter, AMD's processor revenue came in at $1.1bn, which is flat compared to the same period last year. Graphics products revenue edged up 18 per cent to $248m. AMD's executives stressed that they expect processor sales to improve in the coming months thanks to more interest in the Opteron chip.
The company declined to disclose when it will ship 2.4GHz, 2.5GHz and 2.6GHz versions of Opteron in volume.
The angered analysts pushed Ruiz and Meyer to explain what the hell is happening with AMD's "Asset Light" strategy. The company has been trying to find a way of deflecting huge chip production costs, and this strategy is thought to include the use of more chip making partners. Ruiz, however, said, "If it were something as simple as going to a foundry, it would be easy to talk about it." Apparently, this is "much more complex than just a general outsourcing scenario. For that reason, it is taking longer than we thought."
Just about everything at AMD, it seems, is more complex than Ruiz and Meyer thought.
Anyway, AMD says information on the new strategy will arrive in the "near-term," which can mean anything from one-month to one-year in AMDspeak.®