AMD CEO's Shoddy Record Taints Turnaround

One recent rumor has AMD splitting into two separate divisions, with one firm operating as a fabless design house for microprocessors and AMD's current manufacturing arm becoming an independent foundry.

Stifel Nicolaus analyst Cody Acree believes AMD's salvation will ultimately come from the quality of its products.

"Intel and AMD have succeeded and failed over the past several years on the strengths of their products," says Acree, who rates AMD a Buy.

"So, whether or not Hector has this past reputation, or this capability, the fact is these products that his team has brought together are likely to be a suitable alternative for the Suns and the H-Ps of the industry," says Acree, pointing to some of the recent announcements by server makers like Sun Microsystems(JAVA Quote), Hewlett-Packard(HPQ Quote) and IBM(IBM Quote) to offer AMD's quad-core processor in their machines.

Of course, AMD's latest products have only recently started to ship following a delay of several months because of a technical bug. That snafu, along with the decision to incur billions of dollars in debt to buy graphics chipmaker ATI, are ample evidence for some observers that Ruiz is simply repeating the types of missteps that ravaged Motorola's chip business.

Getting AMD out of its current bind while competing with Intel would be a tall order for any leader, no matter how solid his or her restructuring resume. With Ruiz's track record, perhaps the best AMD shareholders can hope for is that yesterday's ordeals will provide perspective and fresh insight to the present challenges.

"I think Motorola turned out to be a training ground for him," says Forward Concepts' Strauss, "albeit a very expensive one for Motorola."