Analysts say new CEO Rory Read will help AMD in its core PC business, but they add that longer term, he will have to find ways to expand the chip maker's reach.
New Advanced Micro Devices CEO Rory Read
is getting a
lot of high marks from industry observers for his work at PC vendor Lenovo, a
significant player in an industry that is core to AMD's business. However, they
said, Read will need to find a way to ensure AMD remains a significant presence
at a time when the PC industry is struggling.
That will mean
not only continuing the company's efforts in driving performance and energy efficiency
in its PC and server chips, but also embracing opportunities outside its
comfort zone, in new form factors like tablets and new enterprise areas like "big
data," according to analysts.
they have to find a way to make AMD more relevant, which is becoming an
increasing problem, given folks are talking about this being a post-PC Era and
AMD is largely thought of as a PC parts company," Rob Enderle, principal
analyst with The Enderle Group, said in an email to eWEEK.
"Long term, they need to get out of Intel and increasingly
Nvidia's shadows so they can shine with their own unique strengths. Their
[Fusion] APU [accelerated processing unit] was actually a good start, but if
they want to shine, they have to be seen as a real leader in a market that
isn't dying. Given the broad implications of the last part of this, it
might have a bigger impact to fix the -dying market' part first."
After eight months of searching
for a successor to
former CEO Dirk Meyer, company officials announced Aug. 25 that Read-most
recently Lenovo's president and COO-is taking the helm at AMD. Company
executives and analysts praised Read, 49, for his ability to grow revenue and
income at Lenovo while keeping control of margins, with some analysts saying
that such an ability to execute will be a key asset for AMD.
conference call with analysts and journalists, AMD Chairman Bruce Claflin, who
oversaw the search for Meyer's replacement, praised Read's passion,
competitiveness and strategic mind-set.
"As a former
[AMD] customer, he will bring the voice of the customer inside the company,"
For his part,
Read-who spent 23 years with IBM before moving to Lenovo-spoke enthusiastically
about what AMD is doing now and its opportunities down the road. He pointed to
the Fusion strategy
-offering processors that
integrate the graphics and CPU on the same piece of silicon-and the company's
upcoming release of its next-generation "Bulldozer" Opteron server chips
, as key
strategic advantages going forward.
At the same
time, he shrugged off the idea that the PC market is in decline, saying the
space for traditional systems will continue to expand for the next five to 10
years. Read also spoke about opportunities in new areas, such as the mobile
computing and cloud computing environments.
He was short
on details about his plans, but said he is still in the early process of meeting
customers and partners.
"AMD is a
unique company," Read said. "There's outstanding potential here."
He takes over
a company that has been trying to find its footing over the past few years
while competing against giant chip maker Intel. The launch of the long-awaited
Fusion initiative in January was important, but it also came at the same time
Intel released its "Sandy Bridge" architecture, which also offers integrated
graphics and CPUs. In addition, a week after the Fusion launch, Meyer was
forced to resign after disagreements with the board over the company's
reportedly was upset about AMD's slow reaction to the mobile computing trend,
as well as the market share it was losing in the server chip space.
generally applauded Read's experience in the PC space, though some questioned
whether finding a PC veteran was the right move.
"We view Mr.
Read as a solid hire with strong PC industry experience that should be
beneficial to AMD's core business," analysts at Deutsche Bank Securities said
in a research note. "However, we note that the former CEO was dismissed due to
a lack of vision and apparent failure to capitalize on the mobile opportunity.
While Mr. Read clearly has strong PC experience, we fail to see how his
experience addresses these concerns."
Read's PC experience more positively.
"Read has done
a great job at Lenovo, building market share while holding onto margins," Dan
Olds, an analyst with Gabriel Consulting, said in an email to eWEEK.
"And he'll certainly give them
credibility with the PC side of the business, particularly notebooks."
his track record with Lenovo Americas will bring the necessary experience
needed to improve [operating expenses] and lead AMD's road map progress," Vijay
Rakesh, an analyst with Sterne Agee, said in a research note. "We believe AMD
made a smart move hiring a key customer into their top management
position, which should at least help AMD hit the ground running, understand the
market and win over some of its customers."
also found the company salesman AMD needed, Nathan Brookwood, principal analyst
at Insight 64, said in an interview with eWEEK.
Meyer had a strong technical background, but lacked the skills needed to sell
the company to large and small groups of people, he said. The same can't be
said about Read, who effusively talked about AMD's culture, road maps,
strategies and people.
him on the [conference] call, that [enthusiasm] really comes across," Brookwood
said, noting that such a personable presence is important as vendors look to
sell their products and road maps. "The company is right now ... set in terms of
products and market position, but with [Read in position], maybe they can sell
more of them."
also talked about the importance of finally having a permanent CEO in place,
saying the lengthy search had a negative impact on the perception of the
company, as well as its financial numbers.
"The issue for
AMD is that the long search made it look like the firm was rudderless, and that
isn't good for customers or investors," Enderle said. "They really needed
someone in that job, or they were likely to start bleeding revenue and
Rakesh agreed. "Another big drag on AMD shares has been resolved with the
announcement of a new CEO," he wrote. "AMD has been without a permanent CEO
since Dirk Meyer left ... which has been a significant overhang on the
shares with constant speculation. We believe the appointment-a smart
move-should help AMD refocus on its markets."
that means pushing forward its core Fusion and Opteron strategies. Farther down
the road, AMD will need to expand what it does, analysts said.
they need to find a strategy that keeps them relevant over the long haul,"
Gabriel's Olds wrote. "To me, it means embracing the newest trends in computing
(like enterprise analytics, or big data, as it's referred to) and craft
products aimed at solving those problems. This doesn't necessarily mean
specialized chips, but it probably does mean initiating and/or supporting
activities aimed at exploiting their Fusion processors for use in these types