It didn't seem to help Advanced Micro Devices (AMD) CEO Dirk Meyer that the world's No. 2 chip maker just announced its fourth quarter would be better than expected. Or that Nomura recently put a buy rating on the company's stock -- or that Gleacher reiterated its buy rating and put a $12 target on AMD shares (the stock currently trades just above $9). Despite this good news, Meyer was pushed out of his job Monday and was replaced on an interim basis by CFO Tom Seifert.
AMD's board said, "We have the opportunity to create increased shareholder value over time. This will require the company to have significant growth, establish market leadership and generate superior financial returns. We believe a change in leadership at this time will accelerate the company's ability to accomplish these objectives." The board will begin the search for a new chief executive immediately.
Meyer was only the CEO of AMD for two years, but he never got out from under the shadow of his predecessor Hector Ruiz. Ruiz engineered the buy-out of graphics chip maker ATI in 2006. The purchase price was $4.5 billion. The deal did not bear fruit financially and ATI sales did not help AMD's top line much, but the debt AMD took on in the transaction was crushing.
Meyer's defenders will say that he moved AMD toward profitability. He didn't do much to improve revenue, but he might not have been able to. Larger rival Intel (INTC) has about 75% of the chip market for PCs and servers worldwide. It faced antitrust charges from AMD, which were settled in 2009 for $1.25 billion. The settlement, however, failed to improve AMD's competitive position.
AMD may be a company that can't be turned around by anyone. Its legacy as an important chip maker is still in place, but its ability to gain market share in an increasingly crowded industry in which companies like Nvidia (NVDA) have joined Intel in the hunt for market share may be too great a task.