AMD (NYSE:AMD) has named the previous President and COO of Lenovo as its new Chief Executive Officer. While this ends a long awaited search for a new leader, it has not excited investors as we had previously assumed this was an overhang on the shares. Clearly investors want to see more from AMD including a compelling product road-map and a solid long-term strategy that will make it competitive going forward. Below we take a brief look at some of the challenges that the new chief will need to address. Some of these obviously relate to better competing against its rival Intel (NASDAQ:INTC).
Here are four things AMD must do in our view to give investors confidence.
1) Convey positive message to investors that AMD is in able hands now. This is going to be very important since AMD’s stock has slide recently and has had a perceived lack of leadership.
2) Develop a compelling plan to address the mobile space, primarily smartphones and tablets. This is another critical aspect that investors would like being considered seriously, given the booming growth in this market and the threat to the traditional PC business.
3) Develop a strategy and product road-map to improve AMD’s poor performance in the server market. AMD could do much better here if we look at the history.
4) Get more aggressive in emerging markets to take advantage of PC shipment growth in these markets. The new CEO has experience in this area which he can leverage.
Our price estimate for AMD stands at $9.90, implying a premium of more than 50% to the market price.
