SAN FRANCISCO (MarketWatch) — The surprising but good news that Advanced Micro Devices Inc. named its Chief Operating Officer Lisa Su to replace Rory Read as chief executive was overshadowed Wednesday by investor jitters that the move boded bad news for the coming quarter.
On Wednesday, after the market closed, the chip company AMD AMD, +0.00%said Su will replace Read, effective immediately. AMD shares slipped nearly 7% at one point after hours, and were trading around $3.06.
AMD
Su, who joined AMD in 2012, previously worked at Freescale Semiconductor Inc. and IBM IBM, +1.97% where she was a vice president in semiconductor research. Su is a rare high-ranking woman engineer in Silicon Valley, with both an M.S. and Ph.D. in electrical engineering, and was named a fellow to the Institute of Electronics and Electrical Engineers in 2009.
But the positive news that the semiconductor company now has a new CEO, who has both serious engineering credentials combined with operations skills, was greeted with jitters because of the timing of the announcement just ahead of third-quarter results next Thursday. Big unexpected news ahead of earnings, especially a CEO shake-up, could imply a quarterly miss is in store.
As a result of those fears, many questions on the company’s call with investors dealt with the curious timing of the announcement.
Outgoing CEO Read, who will stay on in a transitional role until year-end, said the timing was related to a recent board meeting that included a discussion about succession planning.
“We made the decision, and as part of our fiduciary responsibility, we had to share it, because it is material,” Read said in response to one of many questions about the timing of the news. “That is the right thing to do.” In response to an earlier question about the timing, Read said, “The part I am good at, I have done that part.” Read, who joined the company from Lenovo Group, is credited with getting AMD into new markets such as videogame consoles and getting its financial house in order.
But last quarter, AMD’s results showed that the turnaround was hitting a snag, with talk that the company’s sales of chips to console makers would peak in the third quarter.
“I expected Rory to be in the CEO seat for at least five years and his departure was a surprise,” said Patrick Moorhead, president of Moor Insights & Strategy. “It’s hard to tell if he was forced out, but three years isn’t a lot of years, but they are slowly transitioning him out versus walking him out. Rory stabilized the company as the PC market was tanking, but the growth hasn’t showed up just yet.“
All eyes will definitely be focused on the company’s third quarter now.
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