As if Advanced Micro Devices Inc. doesn't have enough problems fending off rival Intel Corp., the semiconductor supplier also must contend with an investment community that is very skeptical about AMD management's current strategy to achieve a much-needed turnaround.
Disillusion and skepticism aren't the only emotions that come to mind when analysts and bloggers write about AMD, however. The company's credibility is also being shredded by observers wondering if AMD's management really has a good handle on its now multiyear and continuously evolving cost-reduction strategy.
It also doesn't help that the company's senior executives, including chairman and CEO Hector Ruiz, have been so far unable or unwilling to divulge details of the company's asset-smart manufacturing strategy unveiled one year ago.
This is worrying because AMD is embarking on another reorganization involving a comprehensive evaluation of its businesses with the declared intention of possibly exiting non-core operations.
Analysts are generally declining to raise their ratings on the company or change the core of their mainly negative opinions until the company provides detailed information on its cost-cutting and other strategic management initiatives.
They might have a long wait. After dodging persistent questions on its asset-smart/fab-lite manufacturing strategy, Ruiz could only promise last week that the company would provide details in the "near future."
Those details might not be known for some time based on Ruiz's definition of near future. "I am not really trying to be evasive, but I think we are truly making tremendous progress in this area. I do not want to be flippant, but, to me, near future is any time in the next 90 days to the rest of the year," Ruiz said.
It may not be clear to Mr. Ruiz, but he has been both evasive with his answers to questions on the asset smart manufacturing strategy over the last four quarters and repeatedly flippant with investor concerns about the company's future.
While AMD's management is taking its time working out details of the asset-smart manufacturing strategy, the company's stock is getting clobbered and its costs remain uncompetitive compared to Intel's.
Furthermore, by withholding details of its cost-cutting strategy, the company is alienating OEM customers, many who must wonder if picking AMD processor for their products would be in their long-term interest.
Does Ruiz know the details of the asset-smart plan?
Probably. But he also leaves the impression it's a work-in-progress.
"We have made significant progress in our asset-smart strategy, and I am personally driving this effort intensely," Ruiz said. "We are very confident that when the time comes for us to implement our asset-smart strategy, that we will have the opportunity to go through another run of cost reductions."
If Ruiz wasn't aware that his credibility was on the line, some analysts unhesitatingly pointed this out during AMD's latest conference call with analysts.
Here's an exchange between Ruiz and Ross Seymore of Deutsche Bank on the issue of AMD's newest plan to "scrutinize our non-core businesses and revisit their strategic fit."
Seymore: "I believe we've just hit the one-year anniversary of hearing about the asset-smart or fab-lite strategy and really haven't seen much to do with it. I know it's a difficult and complex strategy. Is there any reason to believe that that scrutiny of your core and non-core businesses would happen any sooner than that sort of one-year anniversary we've already run into on the fab-lite side?"
Ruiz: "I can assure you that it will happen a lot sooner."
We hope it happens a lot sooner, Mr. Ruiz.