January 11, 2011 — AMD (NYSE: AMD) announced that its Board of Directors has appointed Senior Vice President and CFO Thomas Seifert as interim CEO following the resignation of Dirk Meyer as president, CEO and a director of the company, effective immediately.
A CEO Search Committee has been formed to begin the search for a new CEO. The Committee is led by Bruce Claflin, Chairman of AMD’s Board of Directors, who has been named Executive Chairman of the Board as he assumes additional oversight responsibilities during the transition period. Seifert will maintain his current responsibilities as CFO and has asked not to be considered for the permanent CEO position.
"Dirk became CEO during difficult times. He successfully stabilized AMD while simultaneously concluding strategic initiatives including the launch of GLOBALFOUNDRIES, the successful settlement of our litigation with Intel and delivering Fusion APUs to the market," said Claflin. Doug Freedman, analyst with Gleacher & Company, states "in our view, we believe it was likely Meyer’s decision to leave AMD, perhaps relating to differences in the timeframe to select (newer) initiatives."
"However, the Board believes we have the opportunity to create increased shareholder value over time. This will require the company to have significant growth, establish market leadership and generate superior financial returns. We believe a change in leadership at this time will accelerate the company’s ability to accomplish these objectives." In October 2010, rumors of an AMD sale were not entirely refuted by the company. Freedman sees ongoing improvement in low-power processors (into 4W or less vs. lowest 8W now) to fight ARM in burgeoning growth markets, along with plans to accelerate server market share after declining to roughly 7% in CY10, as top priorities for AMD’s new CEO.
Seifert joined AMD in 2009, and has more than 20 years of general management, global operations and financial management expertise. Immediately prior to joining AMD, Seifert served as COO and CFO of Qimonda AG, where he led the formation and subsequent IPO of the company. At Infineon AG, Seifert served as senior vice president and general manager in its Wireless Business Group.
In commenting on Seifert, Claflin said, "During his tenure at AMD, Thomas helped strengthen the company’s balance sheet while demonstrating strong leadership and winning the respect of his peers. His operations and finance experience make him an excellent choice to guide the company as interim CEO."
"AMD enters 2011 with considerable product and financial momentum. Our roadmap for the year, including our ‘Llano’ APU and 32nm ‘Bulldozer’ based processors remain on track," said Seifert. "I believe we have significant opportunities to cement our leadership positions in several key market segments based on the strength of our upcoming products." Freedman agrees; he does not believe there is any risk to "product roadmap or estimates." He adds that Meyer’s probably vision could have been simply pushed further out than what the board was envisioning relating to the newer initiatives (perhaps tablet or mobile/ARM-based strategy, where AMD has been noncommittal).
In preliminary Q4 2010 results, AMD’s revenue increased 2% sequentially to approximately $1.65 billion and gross margin was approximately 45%. In addition, the company reaffirms its 2011 annual financial guidance as disclosed at its Financial Analyst Day last November.
Analysts expect a negative market reaction to AMD’s time period without a named sucessor to Meyer. Gleacher & Company maintains its "buy" rating on AMD, but warns that there is an "added risk of discontinuity to AMD’s everyday business practices," at least until a new CEO is named.
AMD (NYSE: AMD) is a semiconductor design company that provides AMD Fusion Accelerated Processing Units (APUs). AMD’s graphics and computing technologies power a variety of devices including PCs, game consoles and the powerful computers that drive the Internet and businesses. For more information, visit http://www.amd.com.
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