Dirk Meyer, the man to watch at AMD

news analysis Imagine you're a director for a company that just endured a year that started off with a distribution snafu and then unraveled in a series of engineering glitches, forcing the delay of your most important product in years. Worst of all, your company's stock price dropped 63 percent.

It might be time to start thinking about going in a different direction, right? Not at Advanced Micro Devices. CEO Hector Ruiz said last month that he plans to stay on the job through 2008, and it doesn't appear that AMD's board of directors is inclined to send him packing.

Perhaps that's because they are still auditioning his replacement. AMD confirmed last month what had been evident for more than a year: President and Chief Operating Officer Dirk Meyer is the heir apparent to Ruiz. That strategy became clear years ago through a series of promotions, and Meyer is credited by some as playing a key role in the company's day-to-day operations for about a year.

Meyer is considered an engineer's engineer and was heavily involved in the design of two of the most noteworthy server processors to emerge during the last 20 years: Digital Equipment's Alpha in the 1990s, and AMD's Opteron, released in 2003. But some current and former colleagues of Meyer's say they aren't sure he's the right fit for the top spot.

Dirk Meyer, COO
and president,
AMD

While Meyer has considerable technical credibility, he is said to lack the softer sales-and-marketing touch that's crucial in the corner office. And given the debacle that was the Barcelona processor launch, some wonder whether Meyer--who ran the company on a day-to-day basis while AMD struggled to ship the quad-core chip--may not have the engineering clout he once did.

This year will tell whether he's also the tough competitor and ace salesman the chip outfit will need.

"This company is difficult to manage. It requires a CEO with a lot of energy to go up against (Intel). The CEO needs to be a dragon slayer, given the way we compete," said one source familiar with Meyer's management style. AMD declined to make Meyer or Ruiz available for an interview.

The next six months are a crucial period for AMD, Ruiz, and Meyer. Ruiz promised in December that the company will be profitable in the second half of 2008. That won't be easy. AMD lost more than $1.5 billion during the first three quarters of 2007, and analysts surveyed by Thomson One expect the company to lose 35 cents a share in the fourth quarter. At least that's headed in the right direction, compared with 2006 fourth-quarter loss of $1.05 per share.

AMD is accustomed to boom and bust cycles, and it has some work to do getting itself out of this latest mess. But choosing the right successor to Ruiz, 62, might actually be the company's most important task in 2008.

The man in waiting
Meyer, 46, has worked for AMD since 1995. He has risen steadily through the ranks of AMD's processor group, taking over the division in 2001 and becoming the de facto second in command at AMD in 2005, when the company decided to spin off its flash memory business, making the processor group its only business line. AMD formalized Meyer's status in January 2006, promoting him to president and chief operating officer and naming him to the board of directors in November 2007.

Placing Meyer on the board not only signals to customers and Wall Street that he is an anointed successor, but also changes the way he's viewed by fellow directors, said Jon Holman, who heads up executive recruiting firm The Holman Group. It's very different sitting among your fellow directors as a peer and laying out your strategy, as opposed to making the big presentation as an executive, he said.

Current and former colleagues, who did not wish to be identified, almost universally praise Meyer as a man with "integrity and honesty" who commands respect because of the accomplishments during his career. He's not prone to surrounding himself with yes-men and isn't afraid of being challenged.

But they also acknowledge that much of AMD's troubles during the past year can be placed at Meyer's feet. One source familiar with AMD's internal operations said that during the past 12 months, Meyer has taken on much more of the day-to-day management of AMD, while Ruiz has focused on key customer relationships and globe-trotting to promote AMD's interests, such as its 50x15 project to promote technology adoption in developing countries and its antitrust campaign against Intel. Unfortunately, that also means Meyer has been at the wheel during the Barcelona ordeal.

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