Advanced Micro Devices Inc Inc's chief executive resigned on Monday as the world's No. 2 maker of PC microprocessor chips said it was seeking a new CEO to boost the company's growth, sending shares down nearly 4 percent in after-hours trading.
AMD said the resignation of Dirk Meyer was the result of a mutual agreement with the board of directors and that Chief Financial Officer Thomas Seifert will become interim CEO, effective immediately, as the company looks for a permanent replacement.
The sudden departure of the 49-year-old Meyer, who headed the team that developed one of AMD's most successful chips before becoming CEO in 2008, caught some Wall Street analysts by surprise.
This is no doubt going to be viewed as a potential loss of momentum, said Gleacher & Company analyst Doug Freedman.
The company said there were no financial or performance issues with Meyer that led to his departure. A spokesman declined to say how long the change had been in the works or provide other details on the negotiations around his exit.
A source familiar with the matter said the board viewed Meyer as somebody who stabilized AMD and helped turn it around, but wanted to look elsewhere for an executive to accelerate the company's growth.
AMD is a distant second in the PC microprocessor market behind Intel Corp, whose chips are used in more than 80 percent of the world's PCs.
But consumers are increasingly turning to new gadgets, like smartphones and tablets. Those devices typically use more power-efficient chips than the so-called x86-based processors sold by Intel and AMD that have served as the main processing brains of PCs for years.
Last week, Microsoft Corp announced that its Windows PC operating system would for the first time support chips based on the technology developed by ARM Holdings, in addition to x86 chips.
Shares of chipmaker Nvidia Corp surged 29 percent last week as the company's new Tegra 2 mobile chip was showcased in several new smartphones and tablet devices at the Consumer Electronics Show in Las Vegas.
I think what happened over last week has not helped Dirk's tenure, said Pacific Crest Securities analyst Michael McConnell.
AMD, which acquired Canadian graphics chipmaker ATI in 2006 for $5.4 billion, has much of the technology to develop chips for the new class of gadgets, McConnell said.
It's just that they did not optimize it for the tablet market and for lightweight mobile computing. They decided to stay traditional and go after notebooks, McConnell said.
The change in AMD's leadership comes less than three years after Meyer took the reins and brought stability to the chipmaker's operations. A turbulent period under previous CEO Hector Ruiz was marked by a technical glitch that delayed the availability of a key product.
Meyer oversaw AMD as it spun off its manufacturing arm into a separate company, carrying out a plan laid out by Ruiz.
Dirk was very impressive in getting the company on a stable footing, said Gleacher & Company's Freedman. But he added, I don't know that people viewed Dirk as being the best visionary and strategy roadmap guy.
Seifert, 47, will maintain his current duties as CFO and has asked not to be considered for the permanent CEO job, according to the company's statement.
Shares of AMD were down 3.9 percent at $8.83 in after-hours trading on Monday.
AMD's shares had closed Monday's regular trading session at $9.19, which was about 74 percent above their price when Meyer took over as CEO in July 2008. Their 52-week high was $10.24 on April 15.
AMD also said its fourth quarter revenue increased 2 percent sequentially to $1.65 billion, with gross profit margin of roughly 45 percent. The company is scheduled to deliver full fourth quarter results on Thursday, January 20. Analysts polled by Thomson Reuters I/B/E/S expected fourth-quarter sales of $1.62 billion, with a 45.4 percent gross margin.
Dirk became CEO during difficult times, AMD Chairman of the Board Bruce Claflin said in a statement, citing Meyer's various accomplishments.
However, the Board believes we have the opportunity to create increased shareholder value over time, Claflin said.
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.
(Reporting by Alexei Oreskovic and Noel Randewich; editing by Carol Bishopric, Gary Hill)