AMD in 2005: Coming Out of Intel's Shadow?
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A New Leader
?#8364;œWe are here to stay. We're not going away?#8364;?. - Ruiz Jerry Sanders (Sanders) had been the architect behind AMD's success for over 30 years. He had single-handedly built AMD from scratch and given Intel a run for its money over the years. By the late 90s, Sanders realized the time had come for succession planning. Having crossed 60, he had also come under pressure from the board of AMD to pick an able person to see AMD's plans through in the 64-bit game. Shortly before he announced his retirement, Sanders had handpicked Hector Ruiz (Ruiz) to head AMD.Sanders had started courting Ruiz when he was running Motorola's semiconductor division. Sanders quickly realized Ruiz was the best person to run AMD , ?#8364;œI'm an impact guy; Hector's a process guy. I got to know Hector and realized that he was a corporate kind of guy ?#8364;“ he knew the details of inventory and supply-chain management, things that were not my thing?#8364;?. |
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When Ruiz was at Motorola, he and Sanders had spent two years working together
on flash memory development and copper technology through their respective
companies.
Sanders had tried to buy the semiconductor business of Motorola and merge it
with AMD but the plans failed because of resistance from Motorola CEO Chris
Galvin. Sanders then invited Ruiz to become the COO of AMD and promised to turn
over the mantle by 2002. Despite Motorola's efforts to hold him back, Ruiz
accepted the invitation.
Things were not going well for AMD when Ruiz arrived. The dot-com bubble had
just burst and AMD was moving into the red. There were many problems with AMD's
microprocessors that needed to be addressed immediately. Ruiz laid off about
5000 workers, closed two factories and pursued cost cutting and outsourcing. But
he did not cut R&D expenses. In 2002, AMD, despite losing $1.3 billion on
revenues of $2.7 billion, spent 30% of its revenues on R&D.
Ruiz also kept hiring key personnel to work on Opteron. He acquired two smaller
companies with a lot of technical talent. Ruiz became the CEO in 2002 while
Sanders remained chairman. Later that year, Sanders relinquished the post of
chairman to Ruiz.
Ruiz, who was simpler, hands-on and democratic was a stark contrast to Sanders,
who was known for his flamboyance.
?#8364;œUnder Jerry, frankly, the company was very autocratic and
power-centric?#8364;?. CFO Bob River, who worked with both men commented, ?#8364;œJerry's
style was homerun or strikeout, with nothing in between. Either you had a great
year or it was a flaming disaster. Hector's more process-driven. Now we worry
more about getting men on base?#8364;?.
- Ruiz
Sanders was widely perceived to be an outsized
personality, who managed strategy single-handedly, and made all the
critical decisions by himself. As a result, Wall Street viewed AMD as a
company that was prone to high risks. In contrast, Ruiz, who had come up
from humble beginnings, was shy and retiring. He was known to listen to
people before taking a decision.
"There will certainly be a marked contrast [leadership change] just because
Sanders is known as a boisterous personality and has always been very
enthusiastic in his management style. Hector, as an engineer, is
generally more soft-spoken and generally more thoughtful."
- a former Motorola employee who had worked under Ruiz.
Ruiz stressed the need to please customers. He spent a lot of his time in building new alliances like a joint venture with Sun whereby AMD would power Sun's low-cost servers with Opteron. This seemed a remarkable achievement as the vertically integrated Sun had traditionally used its own SPARC chips.
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