Advanced Micro: Despite Meeting, The Wait for Details Continues

The wait for Advanced Micro Devices (AMD) to outline its so-called “asset smart” strategy continues. AMD CEO Hector Ruiz in his annual shareholder meeting address failed to add any more detail about its manufacturing strategy going forward.

AMD outlined its new server roadmap on Wednesday.

In many respects, Ruiz reiterated previous comments that boil down to this:

• AMD is “strategically important” to the computer industry.
• “I could not be more disappointed with our financial results. The Barcelona delay really hurts.”
• But those problems are behind AMD.
• The future is bright.

That was it. The shareholder meeting lasted 27 minutes or so and it would have been 22 minutes if the only shareholder question wasn’t a rambling mess. Some folks say there’s no such thing as a dumb question. Those folks are wrong.

The first (and last) shareholder question was about golf and sponsoring a tournament. The guy rambled on for five minutes just to ask whether AMD would sponsor a golf tournament. Ruiz said he’d take the suggestion seriously. Me? If there were ever a good time for a hook this would be the case. This guy–who owned 1,000 AMD shares–really made me wish I had a button for a trap door.

But I digress. Anyone looking for detail from Ruiz was disappointed. Ruiz said that AMD remains “on the path of profitability.” Now not all of this disappointment is the fault of Ruiz. Analysts were hoping that Ruiz would use the shareholder meeting to offer up some detail about its strategy. Instead it was more of the same.

Among the Ruiz-isms:

• “Our long-term plan is to be profitability in good times and bad. We’re currently reorganizing the company.”
• “We’re progressing forward with asset smart strategy,” but Ruiz added that he hopes to “disclose more details” at a future date.
• AMD will focus on its core strategy and products. AMD is “doing fewer things better.”
• Customers want choice and AMD’s “product execution is back on track.”
• “We’re overcoming challenges we’ve faced in the recent past. I stand before you with a company that is fundamentally stronger. Our customers have begun to reap the benefits of competition.”

The big question today – as it was yesterday and a year ago – is what will this asset smart strategy look like. Could AMD go fabless? Will this be a partial outsourcing strategy? What’s IBM’s (IBM) role here as a manufacturing partner? Can you go partially fabless and continue to innovate enough to leapfrog Intel (INTC)?

We’re still waiting for those answers.

Comments

[AMD observer]

The performance at the shareholders meeting is typical Ruiz. He will never take ownership of AMD's failures, it's always someone else's fault. Every idea he has ever had at AMD was a bust. The only person keeping this company afloat (for years) is Dirk Meyer. Hector has continued his trend of taking productive, innovative people and disenfranchising them (review his performance at Motorola as the head of semiconductor manufacturing). He has 20/400 vision and can't see past the end of the next quarter. His reluctance to comment on the "asset lite" strategy is typical. I don't think he wants to own it in the event it fails. The assessment in the article above is spot on when commenting on the interdependence of fabs and the development teams. Cycles of learning are key and a foundry relationship seems pretty risky to me, even if they use Fab30/36 in Dresden as a dedicated resource. The people there are smart and will find other, more stable customers eventually. It doesn't feel good to be cut off from the fold and loyalty will go out the window. All that said, there are some awesome folks at AMD with great ideas and the ability to execute. Hector just needs to get out of the way and let them get after it.

[CPU watchtower]

It's not necessary to know what Hector's plans for manufacturing, asset light, or asset smart are. Whatever it is, it will be a failure. Under Hector, everything fails to make a profit. Examples are the Personal Internet Communicator, the overly expensive purchase of ATI, the flash memory business, Alchemy MIPS, snd native quad-core. Only a clueless Hector would waste so much cash to buy ATI at too high a price. Now he says he is structuring AMD to make money without having to depend on continuous performance leadership over Intel. Impossible. What a joke! AMD Phenom and Barcelona are simply too far behind Intel's quad-core processors in frequency, IPC, and power consumption for AMD to succeed in any way. Many AMD executives have quit in the past year. It's time for Hector to get out and hand the reigns to someone else.

[AMD observer]

Bravo, couldn't have said it better.