AMD's CEO transition is a natural next step


— 7:50 PM on October 8, 2014

I just finished listening in to the conference call for financial analysts regarding AMD's CEO transition from Rory Read to Dr. Lisa Su. As usual in cases like this one, the words spoken by Read and Su were carefully chosen and partially scripted ahead of time. As a result, they didn't offer a completely satisfying answer to the questions on everyone's minds about why Read is leaving just a few short years after he took the helm at AMD. Carefully crafted statements from large companies in a time of change rarely satisfy everyone's natural curiosity. One always wonders if there is a larger story behind the official narrative.

Perhaps we'll find out about a profound internal disagreement or dissatisfaction from the board that led to Read's ouster, as happened with Dirk Meyer in 2011.

In this case, though, I think it's entirely possible the reasons behind this change are fairly straightforward. Read said in his opening statement that one of his mandates upon joining AMD was to pick a successor, and he later stated that he hired Dr. Su with that possibility in mind. Read also pointed out that, on his watch, AMD cut operational expenditures by 30%. One doesn't slash a third of the jobs (or something close to it) at a company of AMD's size without alienating quite a few people.

Perhaps Read very intentionally planned to make sweeping changes, to reconstitute AMD's leadership team and structure, and then to step away in a fairly short window.

That's essentially the picture Read painted during his talk, although he's not one to speak in direct, clear language about much of anything. He'd ask you to "reevaluate the binary condition of the wall-mounted switching mechanism" rather than to "turn off the light."

When questioned about the timing of this move, Read briefly spoke in straightforward terms. He said, "The part I'm good at, I've already done," and "Lisa is uniquely positioned for the next phase."

For her part, Dr. Su echoed Read's sentiments about the transition being part of an intentional plan. She also outlined her priorities for AMD going forward, and there wasn't much daylight between those priorities and AMD's strategy under Read. Even the likely changes she outlined—such as an increased emphasis on co-development of products with customers like AMD did with Microsoft and Sony for their game consoles—echo the strategy Read and this team revealed in early 2012. Dr. Su also emphasized that AMD's investments in new x86 and ARM cores, new graphics IP, and SoC integration are "absolutely critical" to the company's future.

Furthermore, under direct questioning, Read and Su both denied this transition was prompted by a disagreement over AMD's long-term strategy. Dr. Su said she and Rory had "really no disagreements on anything" and have been "very aligned."

If the official portrait of this transition is largely accurate, it would be unusual in the context of AMD's last two CEO transitions.

In this case, my natural skepticism is dampened by a nugget I picked up at CES back in January. It wasn't anything I could report, but a well-placed industry source suggested to me that Dr. Su would very likely replace Read as AMD's CEO "within the next six months." Of course, since this is AMD,  the schedule was optimistic, but that prediction proved accurate—and it lends credibility to the notion that this move was in the works for a while.

By practically all accounts, Dr. Su is well-suited by virtue of her experience and ability to lead AMD. If she does well, it seems likely that Rory Read's tenure will be remembered as a time when a corporate turnaround artist installed new leadership and steered the company in a positive new direction.

That turnaround is still very much in progress, though, and the most difficult stages may yet lie ahead. The K12 (ARM) and Zen (x86) cores are still in development and likely will be for another year or more. AMD will struggle to remain relevant in the CPU market until its new cores arrive. Meanwhile, AMD's graphics division has a daunting challenge to face in the form of Nvidia's ultra-efficient Maxwell-based GPUs.

Dr. Su inherits a company with a clear direction and a potentially bright future, but the next 18 to 24 months could be really rough sailing. Here's hoping she—and the rest of AMD—is up to the challenge.

   
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