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MOST READ: AMD's 'Nose Job' Falls Flat

Status quo seems to rule at the troubled chipmaker.

SAN FRANCISCO -- Thirty-nine years after its founding,

Advanced Micro Devices

(AMD) - Get Free Report

has appointed its third chief executive.

But for many investors, the leadership change looks less like Chapter 3 in the AMD story, and more like Chapter 2.5.

Despite the new job titles, the on-the-ground reality within the Sunnyvale, Calif., chipmaker looks much as it did before the news was announced.

Dirk Meyer, the new CEO, was already running much of the day-to-day operations of the company for more than a year as president and chief operating officer. And departing CEO Hector Ruiz will now be executive chairman, tasked with finalizing the new "asset-light" manufacturing strategy that has kept him busy for so many months.

In other words, both executives will be doing the very jobs that they have been so unsuccessful at, and which has left AMD in a financial shambles -- only now they have new titles.

Indeed, other cogs in AMD's malfunctioning management structure remain in place, including Chief Financial Officer Bob Rivet, who like Ruiz, joined AMD after

implementing a less-than-spectacular turnaround effort




erstwhile chip division.

A former AMD executive described Thursday's management change as "cosmetic surgery."

And judging by the stock reaction to the news, it appears the makeover did not beguile the Street.

Shares of AMD were down as much as 11.3% to $4.70 in midday trading Friday.

Meyer and Ruiz certainly have their accomplishments at AMD.

It was the combination of the Athlon and Opteron microarchitectures, projects spearheaded by Meyer, and AMD's invasion of the top-tier PC and server makers like


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, on Ruiz's watch, that made the company a true contender in the microprocessor market.

But the pair also steered the company into its greatest debacles, including the controversial decision to acquire Canadian graphics chipmaker ATI for $5.6 billion at the end of 2006. That deal left AMD with $5 billion of debt on its balance sheet.

It also lay the seeds for AMD's current need to find a new manufacturing strategy -- it's hard to invest billions of dollars in advanced chipmaking facilities when you're losing money and burdened with significant debt-servicing obligations.

Of course, it won't be easy to compete with


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, the world's largest chip company and the paragon of semiconductor manufacturing, by relying on third-party factories, as AMD intends to do.

And simply getting the deal done appears to be fraught with its own challenges.

No doubt, the process is highly complex, and includes thorny issues with the x86 microprocessor license from Intel, which could restrict who is allowed to manufacture chips for AMD. And finding buyers for AMD's two existing fabs in Germany may not be easy in the current financing environment.

Whether AMD actually intends to sell the fabs, split them into a separate company or do something different altogether is unclear, as AMD has been tightlipped about the plan. It's also unclear exactly how much, if any, progress Ruiz has made after more than a year of working on the deal.

AMD's management shuffle essentially represents a thinly veiled plea to trust in the status quo and give Ruiz more time to get a deal done.

There's also a familiar ring to Meyer's talk of strategic changes such as focusing on some of the "big volume, sweet spots" of the chip market. The company began

sounding that line of defense in December

, at its analyst meeting.

"The lion's share of the market opportunity is not looking for the highest performance

microprocessor," Meyer said at the time, but rather in features that focus on value and energy efficiency.

The strategy is interesting, given that AMD's greatest successes have come from doing just the opposite -- winning acceptance first at the high-end of the market and then moving down the ladder.

That said, the recently introduced graphics chip from the ATI division offers a hint about the strategy's potential. While rival


(NVDA) - Get Free Report

built a monster, 1.4 billion transistor graphics engine, ATI built a more humble chip that offers impressive performance for its price.

To compete with Nvidia at the high end, ATI bundles two of the chips together. ATI's new chips have has garnered good reviews, although the ultimate word will come next quarter when AMD and Nvidia's financial results tell the full story.

With AMD's stock trading at six-year lows, and the company continuing to bleed cash, the clock finally ran out for Ruiz. But the problems that sealed Ruiz's fate remain as Meyer takes over.

And given Meyer's share of the blame for AMD's decline, he cannot expect much of a grace period or a cheering section on Wall Street.

"We do not necessarily think that a new CEO will ease AMD's troubles as the firm battles back towards profitability," said Friedman, Billings, Ramsey analyst Craig Berger in a note to investors Friday. But, he added, "anything's worth a shot at this point."