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AMD's Board reportedly kicked Dirk Meyer out of the CEO spot for refusing to pursue the tablets and smart phone market.  (Source: ITP Images)
Board thought CEO wasn't pursuing developing mobile CPUs aggressively enough

We know that Intel is feeling the pressure to deliver in the tablet and smartphone sectors, after having lagged in its response and allowing ARM CPU makers to establish a dominant position.  But apparently Intel's perpetual competitor in the personal computer CPU market, Advanced Micro Devices, was also feeling the heat.

According to a report in The Wall Street Journal, AMD ousted CEO Dirk Meyer because he lacked a convincing strategy to move the company into the tablet and smartphone space.

The move had seemed unusual, as AMD was doing well with its graphics offerings, was finally ready to deliver its first "Fusion" CPU/GPUs, and is on pace to deliver chips with its latest desktop core architecture, Bulldozer, around mid-2011.  Despite all of that, it was mobility that appears to have been the overruling factor when it comes to Mr. Meyer's employment.

The move took investors by surprise and they responded by beating AMD's share price downward.

Mr. Meyer had in the past seemed almost defiant, according to sources, in his opposition of entering the mobile market.  During a new conference at the 2011 Consumer Electronics Show, he stated, "While there are a lot of units there, the revenue is smaller."

AMD's board is composed of industry veterans -- Bruce Claflin, former CEO of network gear maker 3Com Corp.; Robert Palmer, former chief at computer maker Digital Equipment Corp.; and Craig Conway, former CEO of PeopleSoft Inc.  Still one has to wonder if they're making a wise decision throwing out a CPU-savvy CEO and going for someone with less experience, but more of a lust for mobility. 

Stacy Rasgon, an analyst who spoke with Chairman Claflin, comments, "They are looking for a visionary, and casting a wide net... [The next CEO will] not necessarily have semiconductor experience."

Dirk Meyer had been making an annual salary of $950,000, plus a "target" annual bonus of $1.9 million, according to Veritas Executive Compensation Consultants LLC.  They estimate that his severance package was $8.55M USD in cash.  An AMD spokesperson, Drew Prairie, gave a slightly higher estimate of $18M USD.

One of the candidates reportedly being considered to be Mr. Meyer's replacement is Apple's COO Tim Cook.

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This is absolutely crazy...
By jharper12 on 1/12/2011 1:57:53 PM , Rating: 2
From the board, "Dirk, sorry buddy, you've got to go. You just aren't focused enough on the mobile markets. It's not you, it's us. We're just going in two different directions at the moment."

Meanwhile, I'm buying a Thinkpad x120e the moment it's available. It'll be my first AMD notebook (Zacate rocks), because it's the first compelling mobile offering AMD has ever had as far as I'm concerned, a matter of opinion. How does this make sense?!?!?!

Get rid of the entire board. Seriously, we get it, mobile is a big deal. But it's also about to become an even more insanely competitive market with lots of players. AMD can use that to really carve out business in a few niche areas and remain profitable. Then, once the dust settles, jump into the right area of mobile development without losing billions in a gamble.

Intel's strategy is different, they make their money by being on the bleeding edge at all times. They have to go all in, or they risk their differentiating business strategy. Don't follow Intel! That's like some idiot off the street buying GE after Warren Buffett picked up some GE stock. The difference? Buffett was guaranteed a 10% return. If you're not entering the market with the same footing, you can't expect the same returns.

Intel has planned for years to eventually make Atom's TDP low enough for tablets and phones. AMD has thought for years that doing something similar would be a good idea. Having a clear plan years ago gives you an edge in this fight, but if you didn't have that plan, or haven't stuck to that plan, then now the best move is to wait for a strategic opening. There will guaranteed be losers in the mobile markets in the next few years. Wait for them to lose and free up some space for competition.

"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates

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