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AMD's CEO doesn't have Intel to kick around anymore

Wall Street measures Ruiz's head

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Comment After hearing about AMD's first quarter bloodbath, Carly Fiorina and Kevin Rollins must wonder what's wrong with Wall Street. No analyst has yet to place the call for Hector Ruiz's head.

AMD's Q1 blows away anything faced by HP ex Fiorina or Dell ex Rollins. The chipmaker lost $611m as processor sales collapsed by 38 per cent. To offset this dysfunction, AMD will ignite an “asset light” strategy that obviously includes lots of buzzwords, a reduction in staff and more dependence on chip fabbing partners such as IBM and Charter.

AMD keeps blaming a “channel issue” for the first quarter fumble. The story line behind this excuse centers on AMD's transition from serving mostly channel customers to serving mostly OEMs. The strength of AMD's 64-bit product line opened a flood of new business with companies such as IBM, HP, Sun Microsystems and Dell. These demanding types caused AMD to lose focus on its old channel friends. As a result, channel sales dropped and dropped hard during the first quarter.

This scenario might make sense to some of you, but it confuses us. AMD claims to have no supply issues as far as pumping out chips goes. It just didn't get the chips to the right places in time. As far as we can tell, that sounds like a FedEx problem, but Ruiz failed to finger FedEx during his post earnings call with financial analysts.

Ruiz, and his army of executives, did point to pricing pressure, weak consumer electronics demands and those pesky “mix and delivery” issues – aka the FedEx conundrum – as the main drivers behind a “perfect storm” that crushed AMD's quarter.

“The game is really quite different and frankly complex,” said Dirk Meyer, AMD's President. “We suffered some major growing pains.”

Intel Inside Our Gripes

In the good old days, AMD always blamed Intel for its problems.

AMD pumped out Opteron in 2003 and spent the next 18 months or so chiding Intel for the chip's slow adoption. IBM was the only major OEM that wanted anything to do with the chip, and that was Intel's fault. AMD filed an anti-trust lawsuit to prove it.

Blaming Intel became a bit tougher as HP, Sun and then Dell signed on as Opteron customers. Then, the chip started pulling gobs of server market share away from Intel, making the blame game even tougher.

Still, AMD always found time to hurl some anti-trust barbs at Intel, claiming that Opteron would have ruled the world were it not for the mean stares and marketing dollars handed out by Chipzilla's sales folk.

These days AMD doesn't blame Intel for its problems much at all.

“Our competitor did everything in their power to protect their monopoly,” Meyer said, during the call with analysts, but that was as far as the Intel bashing went. Ruiz decided against anti-trust complaints altogether, opting instead to talk about how AMD is “pretty pumped” about its asset light “opportunity” and how the company has learned from Charter, IBM and ATI.

We guess it's harder to blame a rival for your woes after trouncing said rival for four years. If you still can't win after that, the criticism has to go elsewhere. But has AMD slotted the new form of blame in the right, er, socket?

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