AMD: Top Sell Or Not To Sell?

It seems like just yesterday that Dirk Meyer took over for Hector Ruiz as CEO of struggling chip maker Advanced Micro Devices Inc., but the former president and chief operating officer is already discovering the perils of the media spotlight as the new boss.

In a story by the Austin American-Statesman published July 18, Meyer is reported to have said AMD "is just months away from a major restructuring that will spin the manufacturing operations off into a separate company, with new ownership."

AMD is officially headquartered in Sunnyvale, Calif., but maintains its largest base of operations in Austin, Texas. As a result, the local newspapers are usually to first to print a large percentage of corporate news related to the company.

"What Dirk said is that we planned to transform how we manufacture wafers, but we haven't gone into any details about what the specifics of the 'asset smart' strategy are going to entail," said Drew Prairie, an AMD investor relations spokesperson in early August.

In a more recent version of the American-Statesman story, the part about AMD plans to "spin off its manufacturing operations into a separate company, with new ownership" is attributed to analyst opinion, rather than Meyer. The new CEO is still reported as saying he "hopes AMD is just months away from a major restructuring."

Contacted by CRN's online sister Web site, ChannelWeb, in an e-mail to clarify the change, American-Statesman reporter Kirk Ladendorf wrote back: "My editor agrees that we need to do a separate story on the subject in the next few days in which I hope to quote pretty much everything Dirk Meyer had to say on the subject during the interview. So you'll have to wait 'till that runs."

Ruiz first tossed out the phrase "asset light" in a call with analysts in early 2007. It has since evolved into the "asset smart" strategy in the lexicon of AMD public statements. AMD said in its most recent earnings call that it is selling off its consumer electronics division—a lightening of its assets to be sure—but "asset light" or "asset smart" has long been understood to refer specifically to the company's enormously capital-intensive silicon fabrication operations. Whether the strategy involves selling fabs outright or streamlining operations in some other way is a subject of much debate in the financial and technology media.

AMD is one of just two volume manufacturers of microprocessors for PCs and servers that owns and operates its own fabrication plants. Market leader Intel Corp., located in Santa Clara, Calif., is the other.