Sunday, September 2, 2007

AMD Faces Exodus of Executives Ahead of Major Product Launch

As the release of Advanced Micro Devices’ major product approaches, the company continues to lose executives consequently reducing its potential in the long-term future. Even though all of them are leaving for “personal reasons”, the amount of execs fleeing the company in the last year seems to be alarming.

AMD Loses ATI’s Executives and Not Only

On the 22nd of August AMD announced that its chief sales and marketing officer Henri Richard will leave the company after spending five years with it. Mr. Richard joined AMD on the 10th of April, 2002, months ahead of the company’s failure to release its highly-anticipated 64-bit processors on time and a period dramatically gloomy sales of AMD Athlon XP processors, which at the time could not compete against Intel’s Pentium 4.

On the last day of Summer several media outlets reported that Rick Hegberg will also resign from AMD shortly. Mr. Hegberg came to AMD from ATI Technologies, where he has been serving as senior vice president of world wide sales since 2003. The executive was responsible for the overall management of ATI’s world wide sales organization, as well as for achieving the company’s global sales revenue and customer satisfaction objectives among large customers and partners.

The resignation of Henri Richard and Rick Hegberg comes one month after former ATI chief executive David Orton left the company in July, weeks after Chris Evenden, the former public relations chief at ATI, stepped down.

David Orton, is among numerous of ex-ATI executives as well as specialists, who have left Advanced Micro Devices in the recent quarters. Richard R. Heye, a vice president of ATI, left AMD late last year, ironically, just three years after he left AMD for ATI; Paul Dal Santo also left AMD as it absorbed ATI; whereas Peter Edinger, another vice president of ATI, departed from AMD early this year. In addition, a number of public relations persons have left AMD since the two companies became one.

According to official statements, all the leaving AMD employees resign “because of the personal reasons” and it is a natural process since “people come and go”. However, there are no such huge flee of personnel from companies like Intel Corp. and Nvidia. For example, Intel laid off one thousand of managers last year as a part of its overall officially announced workforce reduction initiative, but the only person among the top managers to face changes was marketing chief Eric Kim, who became the chief of digital home group.

AMD Loses ATI’s Revenues, Sales of CPUs Head Down

Under the management of Hector Ruiz and Dirk Meyer, graphics and multimedia business of ATI Technologies lost 40% of graphics products revenue in Q2 2007 compared to Q2 2006 (down from $325 million to $195 million) and also lost 37% of consumer electronics sales in Q2 2007 annually (down from $135 million to $85 million). Moreover, sales of AMD’s own computing solutions also declined in Q2 2007 by 10% annually from $1.22 billion to $1.098 billion in Q2 2007, which is pretty alarming, as a year ago AMD’s computing solutions revenues did not include sales of ATI’s chipsets.

To top it all, AMD’s core management team managed to decrease ATI’s market share from 27.6% in the second quarter 2006 to 19.5% in the second quarter 2007 by decreasing graphics adapters’ shipments by nearly 20% year-over-year, according to figures by Jon Peddie Research.

By contrast to AMD, both Intel Corp. and Nvidia Corp. increased their year-over-year sales dramatically and the latter also managed to boost its graphics adapter market share across-the-board thanks to much more flexible business approach than that of AMD. Intel also does not have a flexible business approach, just like Advanced Micro Devices. But the company still managed not only to leave AMD behind in terms of performance for a year, but also succeeded in releasing quad-core x86 chips almost a year ahead of its smaller rival. Perhaps, this is why execs do not leave Intel and Nvidia – the two direct rivals of AMD – either “because of the personal reasons” or because of their failure to achieve certain goals within the company.

Quo Vadis, The New AMD?

The current financial situation of Advanced Micro Devices is a combination of AMD’s failure to recognize the threat of Intel’s Core micro-architecture back in late 2005, failure to deliver both new micro-architecture as well as quad-core chips on time and ATI’s failures to ensure that the new products and micro-architectures are available on time or ahead of the main rival Nvidia.
Obviously, every manager at both AMD and ATI is partly responsible for the present condition of the company, however, if all of them will step down “because of the personal reasons”, who will work at the company?

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