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AMD CEO vows 'maniacal' chip-baking fix

Customer trust 'eroded', not 'irreversibly damaged'

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AMD's newish president and CEO fairly flaggelated himself for his company's failure in execution during its last quarter, a failure that caused Intel's only real competition to do the unthinkable: leave money on the table.

"We saw both 32 and 45 nanometer supply challenges during the third quarter," Rory Read told analysts and reporters during a conference call after AMD announced its better-than-expected financial results on Thursday. "No doubt, we must improve our execution."

Reed attempted to smooth the feathers of investors who are understandably concerned that AMD was not able to meet demand during the quarter. "From an execution standpoint," he said, "you know, and we know, that we faced significant manufacturing challenges in the quarter. Having said that, demand was strong."

But to meet that significant demand, things have to change. "We will continue an aggressive effort with our foundry partner to improve manufacturing performance at this important 32-nanometer technology," he said. "And we are already seeing steady improvement – day after day, week after week. But we are not out of the woods yet."

His promise to investors: "a maniacal focus on execution across the entire company."

One analyst – Glen Yeung from Citi – was concerned that it was possible that the damage had already been done. "Do you sense that there's a longer term impact from that?" Yeung asked Read. "Did you just turn some customers off forever because you screwed it up on the execution side?"

In response, Read insisted that customers were deeply interested in AMD's products, riffing on stats and figures from the company's recent successes in the mobile market.

"Being a customer in my past job," he explained – Read came from Lenovo, where he had been president and COO – "it's about building trust: trust in execution, trust in technology. We have to continue to focus on that – that is 'job one', from my perspective.

"I don't think we've irreversibly damaged that trust at this point," he told the questioner, "but we eroded some of it."

After defending AMD's decision to slow some of its desktop-chip manufacturing in order to support its growing mobile market capacity, he admitted that some customers "felt some of that pain in the third quarter because we weren't able to execute as cleanly as we would like."

After his long, emphatic answer, Read told Yeung: "Sorry, Glen, but I got fired up about that one."

Speaking of "fired" and "execution", one got the clear impression that should AMD again fail to meet its customers' expectations in coming quarters, we might indeed see some firings.

And although Read may not be capable of actual executions, Texas-governor style, should yields not improve he might find himself wishing that such an incentivization tool were available. ®

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