Advanced Micro Devices, Inc. (AMD) recently announced the appointment of Devinder Kumar as the new chief financial officer (CFO). The new CFO has been associated with AMD for the past 28 years and has served in the capacity of corporate controller over the past 12 years. He was appointed interim CFO four months back. According to a document filed with the Securities and Exchange Commission, Kumar will now be entitled to a one-time cash bonus of $125,000 and various stock option grants.
Like other companies in the PC business, AMD has also been hit by the slump in demand due to the growing popularity of smartphones and tablets and other mobile devices. AMD's chief executive, Rory Read, showed his confidence in Kumar and stated that the new CFO will play an important role in driving the new business model in the near term and strengthening AMD's long-term financial foundation. Management believes that Kumar will add value to its growth strategy and boost its balance sheet.
The company has been laying off engineers while looking for new markets for its chips as it faces falling cash reserves. In October, AMD announced its plans to eliminate 15% of its workforce. Last month, it announced its intention to sell its 58-acre Austin campus in order to raise $150 to $200 million from the transaction.
AMD is the world's second largest maker of microprocessors but it has been losing ground to its larger rival, Intel Corp. (INTC). The company reported a very poor third quarter, with a significant net loss that was the combined effect of weak demand, an inventory write-down and productivity issues. The company's third-quarter sales of $1.27 billion were down 10.2% sequentially and also below the consensus estimate of $1.28 billion.
In order to stay ahead of rivals like Intel and NVIDIA Corp. (NVDA), we believe that top management needs to execute its plans well and come up with new ideas to generate more resources to invest into newer business areas, site consolidations and Internet-related opportunities (mainly cloud computing).
Advanced Micro is expected to release its fourth-quarter 2012 results on January 22, 2013.
Currently, Advanced Micro has a Zacks #3 Rank (Hold).