SAN FRANCISCO -- When Advanced Micro Devices ( AMD) released a new microprocessor in September, company executives, customers and industry analysts bustled about in the private screening room of Lucasfilm, which was used to celebrate the occasion.

In the front row of the theater, a pensive-looking Hector Ruiz sat in silence, impervious to both the festive atmosphere as well as the delay in getting the event started on time.

AMD's chief executive has demonstrated a similar composure as the company has hit rough waters recently, with its stock down 38% year to date. But that may be coming to an end.

With AMD's financial performance and share price slumping, talk of a management change is in the air.

Speculation has been heightened by recent events, including the exit of investor relations head Mike Hasse, and the September departure of sales chief Henri Richard .

Last week, President Dirk Meyer was appointed to the company's board.

Add it all up, and some believe the signs point to a possible change at the top, with Ruiz stepping down, and Meyer taking over.

So far, there have been no public calls among big shareholders or other parties for Ruiz to resign, like those that preceded recent CEO exits at Sprint Nextel and Yahoo.

But rumors are making the rounds among Wall Street trading desks.

Given AMD's challenges and the recent personnel moves, says Stifel Nicolaus analyst Cody Acree, "We have heard more talk that maybe this comes to a head in Ruiz's stepping aside."

Acree, who rates AMD shares a buy, says the chatter appears to largely be emanating from the investor community at this point.

According to one person knowledgeable about the situation, the transfer of power from the 61-year-old Ruiz to Meyer, 45, has been planned for some time.

"Dirk has always been slotted for being the new CEO. That's been clear since his nomination as president and COO" in January 2006, says the source, who spoke on condition of anonymity.

"The question as to when that transition effectively takes place is really a matter of Hector's timing and the board's," the source says, professing to have no indication that the time frame of a move has been altered or accelerated due to the company's current travails.

Short of a dramatic shake-up, an orderly changing of the guard would probably not occur until spring at the earliest.

An AMD spokesperson said the company doesn't comment on rumors.

Ruiz's original five-year employment contract as CEO expired in April, and now operates on a year-to-year basis. AMD's board renewed Ruiz's contract for a one-year period that expires on April 26, 2008, according to SEC filings.

Ruiz, a veteran tech-industry manager who served stints at Motorola ( MOT) and Texas Instruments ( TXN) , has held the top job at AMD since 2002, taking over from iconic founder Jerry Sanders.

While Sanders built AMD and served as its chief executive for 33 years, Ruiz came closest to bringing the company to the promised land, overseeing AMD's transformation from a me-too chipmaker to an established, if undersized, player in today's PC microprocessor duopoly.

The key to that breakthrough was the introduction in 2003 of the Opteron processor, which featured impressive performance and energy-efficiency that allowed AMD to gain market share by winning accounts with PC makers like Dell ( DELL), which had historically brought microprocessors exclusively from Intel ( INTC).

Shares of AMD grew nearly seven-fold during a three-year period ending in early 2006.

This track record has earned Ruiz a nice reserve of goodwill inside and outside the company, something that may explain why there haven't been louder calls for his head given the magnitude of AMD's recent woes.

"It wasn't very long ago that AMD could do no wrong," says Stifel Nicolaus analyst Acree.

AMD's two largest shareholders, Capital Research and Management and Fidelity Management & Research, which own 16% and 13% of the chipmaker, respectively, both declined to comment on individual holdings.

How much breathing room Ruiz has left is unclear. AMD's stock is down 38% this year, closing Tuesday's regular session at $12.40.

Just as importantly, the company's product line looks weak compared to the onslaught of new Intel processors hitting the market , a situation that hasn't been helped by problems AMD has encountered getting its new quad-core Barcelona processor out the door.

And the big bet that AMD made by acquiring graphics-chip maker ATI for $5.4 billion in 2006 has yet to prove its worth. The first real fruits of the union aren't due until 2009, when AMD releases its so-called Fusion processor, which integrates computer processing and graphics acceleration on a single chip.

In the meantime, the rich -- some say excessive -- price that AMD paid for ATI has saddled the company with massive debt and restructuring charges at a time when profit margins are being squeezed by competition with Intel.

In the last three quarters, AMD lost roughly $1.6 billion combined -- and it's not clear when the company will return to break-even.

Still, the surest formula for a change may not involve Meyer replacing Ruiz: both men are part of the current management team and are said to have equally favored the ATI acquisition.

Ruiz also may be unwilling to end his term on a low note.

"Hector is a guy that loves to fight. He's not going to retire on a downturn," says the source.

As Ruiz soldiers on, all eyes will be on his presentation to analysts next month, where the CEO will bear a heavy burden to articulate a cogent comeback plan.

Among the most pressing questions are AMD's manufacturing strategy and its ugly balance sheet, say analysts.

AMD has been tight-lipped about details to outsource more of its chip fabrication to third-party manufacturers, even as it claims to be moving forward with the plan.

Given how central the project is to the company's finances, investors may not be willing to give AMD the benefit of the doubt much longer without seeing signs of progress.

Ruiz has earned the Street's trust with his past performance. But the future will hinge on results.

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