Advanced Micro Devices (AMD) recently declared that three of its senior executives will step down. The General Manager of Computing and Graphics Business Group, John Byrne; Chief Marketing Officer, Colette LaForce; and Chief Strategy Officer, Raj Naik are the three executives who will leave the company to look for other opportunities.
The news of the departure follows the company’s recent layoffs and the hiring of interim chief executive officer (CEO), Dr Lisa Su. Su appears to be reorganizing the business to get the company back on growth track.
In Oct 2014, AMD took the technology industry by surprise when it suddenly announced the resignation of the then CEO Rory Read. Read was replaced by Su, the company's former chief operating officer. At the same time AMD disclosed its plan to lay off 7% of its workforce during the fourth quarter. It didn’t mention the specific number of Austin employees to be affected but revealed that with the move it expects to save about $85 million in 2015.
The announcement could have been prompted by AMD's disappointing third-quarter performance in which the company posted revenues of $1.43 billion, down 0.8% sequentially and 2.2% year over year. Third-quarter revenues were below the Zacks Consensus Estimate of $1.47 billion. It reported earnings of 3 cents per share in the third quarter of 2014, which missed the Zacks Consensus Estimate by a penny.
Advanced Micro is the world's second largest manufacturer of microprocessors but it has recently been losing ground to its larger rival, Intel Corp. (INTC). During Read’s tenure, though the company rearranged debt and reduced its costs through job eliminations, it continued to lose market share in personal-computer processors to Intel.
Of course, despite improvement in the overall PC market, the consumer market remains under pressure. As a major share of Advanced Micro's chips is incorporated into consumer desktops, it has not benefited from the enterprise driven strength in PCs. Intel’s new product lineup also indicates that it will soon be very hard to beat even in the consumer segment.
AMD has been expanding in high-growth high-potential markets such as game consoles and low-power servers. It has been making continuous efforts to reorganize, speed up and ultimately reinvigorate the brand, but progress has been slower than expected.
Currently, Advanced Micro has a Zacks Rank #4 (Sell). Better-ranked stocks in the space include Ambarella, Inc. (AMBA) and Avago Technologies Ltd. (AVGO), both sporting a Zacks Rank #1 (Strong Buy).
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