Former IBM, Lenovo exec takes the helm at AMD
8/25/2011 10:27 AM EDT
SAN FRANCISCO—Advanced Micro Devices Inc. (AMD)'s board of directors Thursday (Aug. 25) appointed as president and CEO Rory Read, a longtime IBM exec who most recently was president and chief operating officer at PC vendor Lenovo Group Ltd.
The appointment of Read, 49, caps a seven-month search for a permanent CEO after Dirk Meyer resigned in January under pressure from AMD's board. Read was also appointed to AMD's board of directors, the company said.
Read spent 23 years at IBM, where he held a broad range of management positions, AMD said. He moved in 2006 to Lenovo--which bought IBM's PC business. In 2009, he was promoted to president and COO.
In a conference call with analysts following the CEO appointment, Bruce Claflin, chairman of AMD's board of directors, described Read as a proven, respected leader with a record of driving profitable growth and transformation.
"He is a passionate leader who has energy and enthusiasm to match his drive and determination," Claflin said. "He's a competitor who loves to win and hates to lose. And, while he is a skilled operator, he also understands the importance of sound strategic thinking in order to have long-term success.
As a former customer, Read will bring the voice of the customer inside AMD, reinforcing its position as a strategic partner, Claflin said.
Read described AMD as a unique company in high-tech , with innovation, talent, unique IP and room to grow. "There's a proud history at AMD, and it's great set of technologies, a strong team and clearly unlimited potential," Read said. "We have a rich history at AMD of delivering the next big thing first."
Read said AMD has shipped more than 12 million Fusion accelerated processing units since the company launched the product in the fourth quarter of 2010. AMD has growth potential in its core PC processor space as well as other markets such as mobility and cloud computing, he said.
"This is a changing industry," Read said. "There's no doubt about it. But change is good for AMD. And this change really plays to our strength as an innovation challenger in this space."
Craig Berger, an analyst with FBR Capital Markets, described Read as a credible "new guard" executive who has spent the past five years in the trenches at Lenovo. "We do think Mr. Read can and will leverage his relationships at Lenovo to help drive AMD’s sales, and at IBM to help drive AMD’s R&D and foundry strategies," Berger wrote in a report circulated Thursday.
But Berger said AMD's business model remains structurally challenged as Microsoft's move to enable the next generation of Windows to run on ARM-based processors and the rise of ARM-based tablets cut into AMD's consumer and PC business segments.
"The basic question to be answered is whether AMD will remain the firm number two to Intel's x86 processors, or whether Nvidia and other ARM on Windows suppliers will now become the alternative to Intel’s x86, and what role does an AMD have in an ARM on Windows world," Berger wrote. "These questions, and AMD’s response to this challenging situation, will not be resolved or clarified anytime soon.
Vijay Rakesh, a semiconductor analyst at financial services firm Sterne Agee, said the appointment of Read should resolve the drag on AMD's share price that the company's long CEO search created.
"We believe the appointment—a smart move—should help AMD refocus on its markets and strategy," Rakesh said. Wall Street's initial reaction to the news as been positive overall, Rakesh said.
Paul McWilliams, editor of technology investment newsletter Next Inning Technology Research, said Read's Lenovo background is a good pedigree for the role of AMD CEO. Citing research from International Data Corp., McWilliams said 32 percent of PCs bought in China are from Lenovo.
"This positioning fits well with the strategy AMD began executing several years ago that led to PCs using its processors to develop a very strong share in the Chinese Internet Cafe markets," McWilliams wrote in a report. This strategy has given AMD more favorable brand name awareness in China than it has in most developed markets, McWilliams said.
Thomas Seifert, who served as AMD's interim CEO since January, will return to his role as senior vice president and chief financial officer, AMD said.