AMD's Ruiz steps off the roller coaster

A tumultuous six years as the head of AMD has come to an end for Hector Ruiz, and while he has several accomplishments to tout, AMD lost an amazing amount of money during his reign.

Hector Ruiz accomplished many important things during his tenure as the CEO of Advanced Micro Devices, but no executive can escape the bottom line.

AMD's CEO Hector Ruiz is stepping down from his CEO spot; he'll remain the chairman of the company. AMD

In just more than six years with Ruiz as the leader of AMD, the chip company has lost a staggering $6.3 billion according to generally accepted accounting principles. He announced plans to step down Thursday as part of what the company is calling a planned succession to new CEO Dirk Meyer, even though Ruiz was under the impression as recently as December 2007 that he would be around this entire year.

"A lot has changed at AMD since then," an AMD representative wrote in response to e-mailed questions about Ruiz's expectations last year. One thing that hasn't changed since then is the company's continued pattern of losses. But AMD has laid off thousands of workers and revamped its executive circle , which has strengthened the team around Meyer to the point where the board of directors feels the timing is now right for the succession, according to the representative.

Despite all the setbacks, it's still possible to argue that Ruiz leaves AMD a better place than it was before he took over. Sure, investors might have preferred to lose a little bit less than $6 billion in six years, but AMD is a brand that corporate executives know just as well as hard-core gamers, AMD's main audience prior to 2002.

All four major server vendors (Hewlett-Packard, Dell, IBM, and Sun Microsystems) have a relationship with AMD. Just about every major PC vendor in the world has a product based on AMD's chips, with the notable exception of Apple. Corporate purchasing departments don't shake their heads in confusion at seeing AMD's name on a purchase order, and consumers are quite used to seeing AMD-based systems on the store shelves at Best Buy and other stores alongside Intel systems.

In short, Ruiz made AMD relevant to a much wider segment of the computer buying population than it was before he became the company's CEO, and for sticking to his guns with AMD's bet-the-farm strategy for its Opteron chip. For that, he deserves credit. But the events that led to his demise are equally easy to chronicle.

Ruiz with Dell's Michael Dell in 2006, just after the companies signed their historic agreement to partner on servers. Ina Fried/CNET News

AMD succumbed to the classic innovator's dilemma: once it was clear Opteron was a hit, especially in dual-core format, AMD failed to come up with a worthy successor.

It insisted on an integrated quad-core design for its third-generation Opteron processor, claiming that its customers were eager for such a design. But the project suffered from countless delays , and AMD allowed Intel to have the quad-core segment of the server market all to itself for more than a year, destroying the hard-earned pricing value that AMD had attached to Opteron for several years.

Once it was also clear that Intel had regained its footing after botching the Itanium strategy and the switch to dual-core processors, AMD panicked and spent $5.4 billion it didn't have on ATI Technologies in order to find its next big thing in graphics technology.

Ruiz was right, in a sense: graphics technology is going to be an ever-increasing part of a PC's arsenal and will probably one day end up getting integrated into the main processor like so many other discrete components from the past. Intel and Nvidia know this, and are spending tons of time and money improving the performance of their graphics products and finding new ways to unlock that performance.

But with Thursday's results, AMD has now written off $2.5 billion of goodwill related to that ATI purchase, basically admitting that it can't attach that $2.5 billion to anything of value related to the acquisition. That's an awful lot of money, and it has to come from somewhere, forcing AMD to raise capital from outside investors to keep the lights on.

Ruiz introduces AMD's Barcelona processor in September 2007. Already very late, Barcelona wouldn't ship for another six months due to a separate problem. Tom Krazit/CNET News

Ruiz's greatest legacy to the processor industry might still be off in the future. His decision to file an antitrust lawsuit against Intel in 2005--and work a short rant about illegal monopolies into just about every speech since--has the larger chip company on the run around the world as governments take a closer look at Intel's business practices during the past decade. Any trial resulting from that case in the U.S. still appears to be years away, however.

Leaders are judged on many things after their moment in the sun passes. Ruiz brought some stability to AMD--at least in the public eye--after decades of swashbucklin' quote-makin' Jerry Sanders. His personal story, rising from a poor town on the Texas/Mexico border to lead a Fortune 500 company, is inspirational both on its merits alone and on Ruiz's stubborn reluctance to play up his ability to overcome adversity as if he was filming a segment for Dateline.

But his tenure was chaotic, a roller coaster ride up and down the stock market charts that saw AMD arrive on the world stage and fall just as quickly off to the side. Running the No. 2 company in an expensive, fast-moving industry dominated by an American institution is not an easy job, and Dirk Meyer will have his hands full during the next several years. Ruiz will remain at AMD as chairman, but he's leaving a day-to-day role at the company at a time when it is trying to get back to basics, to focus on execution and discipline rather than trying to take down giants.

So perhaps it's fitting to remember the words of football legend Bill Parcells when assessing Ruiz's legacy: "You are what your record says you are."

About the author

    Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.

     

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