January 3, 2008 4:00 AM PST

Dirk Meyer, the man to watch at AMD

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Barcelona is AMD's first quad-core server processor, based on the original Opteron design. The company decided to build a chip in which four Opteron processor cores were integrated onto a single piece of silicon, which is hard to do but pleased customers who wanted to protect their investments in the chipset and motherboard technology used in AMD's earlier designs, according to executives. AMD representatives repeatedly declined to comment on Meyer's role in Barcelona's development, but he's been the man in charge of the processor division since 2005.

Barcelona was originally supposed to arrive in mid-2007, but a steady stream of problems pushed most of the shipments well into 2008. AMD shipped Barcelona processors to select customers in the fourth quarter of 2007 after introducing the chip in September. However, after the first customers started getting their chips, a serious bug was uncovered that required the chip to be reworked before it could be sold to the general public. Performance is expected to suffer as a result.

Because of all this, lots of customers who were looking for all-out server performance in 2007 went with the competition. Intel's decision to build a quad-core processor by assembling two dual-core chips into a package--derided by AMD executives as an inelegant hack far beneath their "true quad-core" design--meant that Intel has enjoyed much more than a year with the quad-core server processor market to itself.

Intel has gone on to release the second-generation of its quad-core chips, and has a third iteration planned for later in 2008 called Nehalem that borrows many of the design techniques that made the original AMD Opteron such a hit, namely the integrated memory controller and the point-to-point interconnects that directly link cores to their neighbors. Those features allowed AMD's processor cores to enjoy fast connections to memory and to their fellow cores on a multicore chip, improving the overall performance of a chip.

However, AMD's combination of problems doomed its financial performance, especially after it was forced to severely discount its aging dual-core chips to compete against Intel's products. AMD promised financial analysts in December that it will break even by the second quarter, but they seem skeptical: Bank of America's Sumit Dhanda cut his rating on AMD to "sell" on Wednesday, citing an expected slowdown in the economy in the first half of the year and AMD's own internal troubles.

CEOs at other prominent technology companies, such as Motorola, Yahoo, and Dell have slinked off stage for performances that don't even come close to AMD's troubles--which have also included a distribution gaffe that alienated channel partners, the reorganization of its sales organization following the departure of sales chief Henri Richard, and a pending write-off of some portion of the $3 billion in goodwill associated with the October 2006 acquisition of ATI Technologies. But in AMD's case, it's not clear where the blame should be directed.

"It's hard to discern among the executives, since they present a unified front," said Ross Seymore, a financial analyst with Deutsche Bank.

Ruiz told CNBC Europe on the eve of its December financial analyst conference that he had no plans to step down in 2008, and sources familiar with AMD's succession planning say that the company's performance last year has not accelerated the timing for Meyer's ascension to the CEO spot--pinned at late 2008 or early 2009. Still, sources familiar with the board note that just like any other CEO, Ruiz serves at the pleasure of the board.

Often when a company president is named to the board of directors, that executive is named as CEO within six months to 12 months of joining the board--18 months at the latest, said Stephen Miles, managing partner of leadership consulting in the Americas for executive search firm Heidrick & Struggles.

There's a reason for that. The practice of naming a No. 2 executive to the board of directors is fairly uncommon, occurring in roughly less than 1 percent of companies in corporate America, Miles said. Intel and New York Life have used that strategy in recent years, but the No. 2 generally only gets to sit on the board once they become the No. 1.

"When a company is under siege, they know the No. 2 is likely to exit so this is a way to lock them in as a retention maneuver. It signals that a succession plan is in place and the clock is ticking," Miles said.

A Meyer administration
While AMD needs leadership as much as the next organization, it faces a number of unique hurdles.

Modern PC and server processor development is a two-company game, and Intel's staffing and marketing budget dwarfs AMD's resources; AMD must be nearly perfect just to keep pace. Intel can afford to throw away billions of dollars on peripheral products and acquisitions, tear up its technology roadmaps, and still remain profitable.

AMD doesn't have that luxury; when it places a bet, it needs to make the right call.

That also means that it has to take risks, and not all of them will pay off. The original Opteron design was a huge risk in 2002, but it paid off in spades. Paying billions of dollars more for ATI than it was worth? The lasting effects of that decision, in which Meyer played an important role, remain to be seen.

So, what kind of CEO would Meyer make? Despite the problems with Barcelona last year, Meyer's obvious strength is his technical background. But sources who have worked with Meyer have some concerns: the CEO of a chip company is not the lead architect on every design; he or she is a salesperson, a manager, a negotiator, a disciplinarian, and a visionary.

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8 comments

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softer sales-and-marketing touch?
The world unfortunately revolves around sales and marketing types, they are usually promoted to the highest level of incompetence.
Posted by ColdMast (186 comments )
Reply Link Flag
Peter Principle
<a class="jive-link-external" href="http://en.wikipedia.org/wiki/The_Peter_Principle" target="_newWindow">http://en.wikipedia.org/wiki/The_Peter_Principle</a>
Posted by ColdMast (186 comments )
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A different perspective
Well as far sales and marketing folks being CEOs I think that it's a matter of old school business. Were you have the original standard business types that have been around for hundreds to thousands of years and it's simply a case of that is how it has been. Although perhaps technology has been around with them in one form or another those folks were looked upon as skilled labor not business types. It is the second have of the twentieth century that you have that slowly begin to change.

You have an arrogance among the old school types and thus their common mis perception that soft/people skills can't be taught but hard or technical skills can and it is these soft skills that matter. Quite the reverse is typically true. You can always put the people skilled folks in positions were they matter other then CEO. However you either have an aptitude for math and other High Tech skills or you don't. Which brings to mind the story about throwing manure against the side of a barn and making it stick it's not a hard skill to learn.

The bottom line is that AMD was growing hand over fist while Intel was tripping over it's own feet from 1999 to about 2006. AMD had gained enormous market share. For what ever reason the powers that be at AMD decided to emulate Intel and sit on their hands. Technology upgrades slowed to a snails pace over the years and once Intel stopped floundering with gimmicks and bullying they got serious and reintroduced technology to their products and turned it around. AMD continued to sit on their hands until the loss of market share finally woke somebody up who took notice. Unfortunately it was one of the old school types and instead of getting off their backside and going full speed ahead with technology they simply pulled a play from the old school book and purchased ATI which began a very serious downward spiral and has nearly cast them into financial ruin.

Sales and marketing folks can certainly sell a lousy product they can even sell a nonexistent product as well. That doesn't make them good CEOs nor better suited for that position then the folks who dream up real products and the processes that are needed to make them. Perhaps it's time for the old guard to step aside and let somebody with a brain take charge for a change.
Posted by processeon (2 comments )
Reply Link Flag
Bad Strategy
Ruiz is doing a fine job as a CEO, in my opinion. It's a mistake to replace Ruiz with Meyer. Meyer used to work for Intel, so he thinks like Intel. This is the last think AMD needs, someone who can't see beyond Intel's playground. AMD needs to find a tech visionary who is willing to stop playing Intel's game and forge a new market. Now that the industry is beginning to take its first painful steps away from sequential computing toward massive parallelism, AMD has the chance of a lifetime to redefine the multicore CPU market and leave Intel holding an empty bag. AMD must re-evaluate the current state of the art in parallel computing and determine what is wrong with it. And there is a lot that is wrong with it (see link below). As soon as they can identify the real nature of the problem, they can formulate a solution that will corner the market. I'm sure Meyer is an excellent engineer but I doubt very much that he has the sort of vision that will catapult AMD into a leadership position in this cut-throat market.

The Age of Crappy Concurrency: Erlang, Tilera, AMD, IBM, Freescale, etc...
<a class="jive-link-external" href="http://rebelscience.blogspot.com/2007/09/age-of-crappy-concurrency-erlang-tilera.html" target="_newWindow">http://rebelscience.blogspot.com/2007/09/age-of-crappy-concurrency-erlang-tilera.html</a>
Posted by eightwings (32 comments )
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Hmmmmm
The problem is that they "are" playing Intel's old game of sitting on technology. Intel had a near total monopoly when it did that and it eventually lead to AMD getting with in a stones throw of being on an equal footing with Intel's share of the CPU market.

AMD "was" past tense an innovator of current technology and with the Athlon the new. They stayed the course with DDR and quickly introduced new and improved technology into their products such as ATA well before Intel and often going beyond Intel. That is what got them the to point of having Intel well with in their sights. Then along can Hector Ruiz and he introduced the old Intel sit on your hands and wait routine. Don't know much about Dirk Meyers but they definitely need someone who can both straighten out their current mess and start introducing a steady stream of new innovative technology again. More to the point with out making another acquisition nor selling FABs. Which of course the latter is the old school mentality.

The old school boys sit on a product until the market for it dies and then simply buys and sells companies, assists and stocks. They don't have the brain God gave a gnat when it comes to growing a business into an icon.
Posted by processeon (2 comments )
Link Flag
Time to buy AMD? AMD a bargain stock?
Dirk Meyer was *the man* personally responsible for the Athlon coming out and saving AMD ass in 2003. He's known to be a difficult guy to work with, but so is Steve Jobs. What I do know about him, is that he's a great engineer and surely the right person to make the AMD/ATI merger work in the *long term*. If your willing to go long, bet on Captain Dirk.

Considering that AMD is at a 5 year low, it seems that it is a good time to buy AMD. Here's a detailed analysis that I've read, by someone who has been buying AMD during this downturn.

<a class="jive-link-external" href="http://amdinvestor.com/2007/12/27/what-do-you-think-amd-is-worth-an-amd-stock-analysis/" target="_newWindow">http://amdinvestor.com/2007/12/27/what-do-you-think-amd-is-worth-an-amd-stock-analysis/</a>

Yes it's true that AMD has had a bad year, and will have another bad year to come, but for those willing to hold, it could be profitable?
Posted by hicamproject (1 comment )
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