January 21, 2011 / 5:58 PM / 7 years ago

Leadership worries hang over chipmaker AMD

SAN FRANCISCO (Reuters) - Concerns about Advanced Micro Devices Inc roll-out of its new PC chips hung over its shares, despite the company’s expectations of a better-than-seasonal first quarter.

AMD’s stock fell 5.24 percent to $7.60 as investors worried that early production and sales of new chips, including the upcoming 32 nanometer Llano processor might go less smoothly after chief executive Dirk Meyer abruptly left last week, despite assurances by the company.

“I still think there’s a risk, even though they say Llano is still on time,” said Kevin Cassidy, an analyst at Stifel Nicolaus. “They’re trying to do a very difficult technology transition.”

AMD posted better-than-expected earnings for the fourth quarter late on Thursday and said revenue in the first quarter could be flat or down 4 percent compared with the December quarter, which normally gets a boost from holiday shopping.

Cassidy said concerns AMD’s server business is losing ground to Intel Corp were also weighing on the company’s stock.

Meyer left AMD partly because of concerns the company has not targeted the tablet and smartphone market, but chief financial officer Thomas Seifert told analysts on a conference call on Thursday that no immediate strategic shift was underway.

The Sunnyvale, Calif-company has hired an executive search firm to quickly find a new chief, but some analysts say AMD has not been clear enough about the reasons for Meyer’s departure or what strategic changes to expect.

“It creates more uncertainty and doubt among the customers. They don’t want to ramp up new architecture and make changes and then have the strategy change,” said Craig Berger, at FBR Capital Markets.

Reporting by Noel Randewich; editing by Andre Grenon

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