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AMD readies Bulldozers to ship next month

Profitable, but desperately seeking chipper CEO

The hybrid CPU-GPU chips for mobile PCs gave Advanced Micro Devices some breathing room in the second quarter, but it's going to take continued ramping of these APU processors and an upswing in Opteron server sales to get the company back to the profit levels it should be enjoying during a retooling phase in the IT market – and it looks like AMD and its server partners won't have to wait too much longer.

In the quarter ended July 2, AMD had $1.57bn in revenues across its processor and discrete graphics chip lines, which are blurred by the advent of APUs. That was a 4.8 per cent decline, year-on-year, but Q2 2010 had 14 weeks compared to 13 weeks for Q2 2011, so it's not as bad as it looks.

Perhaps more importantly, AMD kept a lid on costs even as it was rolling out and marketing new 32 nanometer chips for mobile PCs, allowing it to swing from a loss of $43m in the year ago quarter to a $61m profit this time around.

That's considerable progress, and the AMD board must be pretty miffed that its CFO, Thomas Siefert, who is acting CEO while the company has been engaged in an executive search to replace Dirk Meyer, ousted back in January, has declared himself to be a temp.

Siefert can clearly run the company but says he doesn't want the CEO job. But if AMD doesn't find a CEO soon, Siefert may end up with it just the same. The word on the street is that Mark Hurd, former HP CEO and current Oracle co-president, has been approached to take the AMD CEO job, but declined.

Ditto Tim Cook, COO at Apple, who also said "No thanks" according to rumors, as did Pat Gelsinger, former general manager of Intel's Data Center Group and now a COO at EMC. Greg Summe, a managing director at private equity firm Carlyle Group and formerly the chairman and CEO at defense contractor PerkinElmer and previously a top exec at Honeywell and General Electric, has also reportedly been approached for the job. He demurred, as well.

On a conference call with Wall Street analysts going over the Q2 financial results, Harry Wolin, AMD general counsel and secretary, made a statement right off the bat about the hunt for a top dog to run the company.

"The search for a new CEO remains a top priority," Wolin said. "The board is pleased with the quality of the candidates interviewed and is confident in its robust and active process. They continue making progress to ensure a person is selected with the right vision, experience, and track record to lead AMD into the future and to create increased shareholder value.

"The board is pleased that the senior management team has executed well throughout this timeframe. I would like to take this opportunity to emphasize that meeting a time line is not the driving force for the search. Finding the right candidate is," he insisted.

Kirk Skaugen, general manager at Intel's Data Center Group, probably won't take the job – and it's intriguing to think that AMD might have asked. Doug Grose, the former CEO at AMD's chip partner and former foundry operations, GlobalFoundries, is looking for work after being asked to step down by Advanced Technology Investment Company, the moneybags of the Abu Dhabi government that owns GlobalFoundries. Both AMD and GlobalFoundries are headless at the same time now.

Perhaps they should have just swapped CEOs?

Computing flat, discrete graphics down

In the second quarter, AMD's revenues from its Computing Solutions group, which makes PC and server processors and chipsets, had flat sales at $1.2bn. Sales of the "Brazos" and "Llano" APUs were up, but were offset by lower server and desktop CPU sales.

Siefert said that AMD had record shipments of mobile processors in the quarter thanks to the APU ramp, with APUs now representing 70 per cent of both shipments and revenues for processors and chipsets for mobile platforms. In the quarter, AMD shipped over six million Brazos APUs and over one million Llano APUs, and Siefert said that the ramp for Llano chips was even faster than for Brazos, which is good news for the third quarter. AMD shipped 3 million Brazos units in the first quarter of this year, so Llano should do better than that in the third quarter. The APUs now comprise more than 40 per cent of all client microprocessors shipped by AMD.

Thanks in part to the higher ASPs that the APUs offer, the Computing Solutions group was able to book $142m in operating income, up 10.9 per cent from a year ago and, again, with one fewer week in which to make the sales.

As anyone could have predicted, AMD's Graphics division took some lumps, with revenues of $367m, down 16.6 percent, and swinging from a $33m operating profit a year ago to a $7m operating loss this time around.

On the server front, Siefert said that the 16-core "Interlagos" Opteron 6200 processor, the first server chip to make use of the "Bulldozer" core and implemented in GlobalFoundries' 32 nanometer processes, would ship this quarter to OEM partners. He added that the chip would offer about a 35 per cent performance boost compared to the current 12-core Opteron 6100s.

"We are committed to the server business and getting it back on a growth trajectory," Seifert said emphatically. And later in the call, he said that once the Opteron 6200s are out, AMD would see "a material impact" by the fourth quarter.

Still later in the call, when it was clear that Wall Street needed something to get excited about, AMD let slip that the Opteron 6200s would launch next month and that their desktop companion, the FX Series, code-named "Zambezi", would come out next month, as well. After clarification from AMD's press relations people, El Reg discovered that AMD's top brass meant to say that these two chips would ship for revenue next month, but it is still not clear when they will be formally announced.

AMD didn't want to say much more about the third quarter, except that overall sales for the company should be up 8 to 12 per cent compared to Q2. ®

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