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Business – Ruiz’s Rise to Prominence Said to Culminate in Galleon Link

Ian King

Oct. 28 (Bloomberg) — Hector Ruiz, the most prominent executive tied to the Galleon Group LLC insider-trading case, rose from his origins in a Mexican border town to take on Intel Corp., the world’s largest chipmaker.

Ruiz, 63, is the Advanced Micro Devices Inc. executive government prosecutors say provided nonpublic information to Danielle Chiesi, who is alleged to be part of the Galleon insider-trading ring, a person familiar with the matter said yesterday.

An engineer with master’s and doctorate degrees, Ruiz was appointed as AMD’s second chief executive officer in 2002, succeeding Jerry Sanders, who founded the company in 1969. Ruiz brought a soft-spoken style to the company’s top job, a contrast to the designer suits and cowboy boots of his predecessor. They shared a common desire: to challenge Intel in the $32 billion market for microprocessors, the brains that run personal computers.

“He fought the underdog fight for years against Intel,” said Roger Kay, an analyst with Endpoint Technologies Associates in Wayland, Massachusetts. “He was a hard-charging executive, take-no-prisoners type.”

Ruiz, who stepped down as AMD’s CEO last year, was instrumental in the company’s plan to spin off its manufacturing plants, a strategy he called “asset smart.” He became chairman of Globalfoundries Inc., the new company created from the spinoff.

Plant Spinoff

Prosecutors released fragments of recorded conversations between Chiesi, a former Bear Stearns Asset Management official, and an AMD executive, in which they allegedly discussed the timing of the spinoff of AMD’s plants. The unnamed executive told Chiesi about the transaction in September 2008, ahead of the announcement of the deal, according to court documents.

Ruiz hasn’t been charged with wrongdoing in the case, and prosecutors don’t say he profited from insider trading. Ruiz declined to comment, said Jon Carvill, a spokesman for Sunnyvale, California-based Globalfoundries. Ruiz is still the company’s chairman, Carvill said yesterday.

As a child, Ruiz walked across the border each day from his home in Piedras Negras, Mexico, to a high school in the South Texas town of Eagle Pass, according to a profile on Rice University’s Web site. Even though he didn’t start learning English until he was 16, Ruiz graduated as valedictorian of his senior class.

Engineering Degrees

He earned bachelor’s and master’s degrees in electrical engineering from the University of Texas at Austin, and a doctorate in engineering from Rice University in Houston in 1973. That opened the door to positions at Texas Instruments Inc. and then Motorola Inc., where Ruiz became the head of its semiconductor division. Sanders hired Ruiz from Motorola in 2000 to groom him as a successor.

“Hector is one of the most respected figures in the industry,” said Dan Hutcheson, head of VLSI Research, a semiconductor research company in Santa Clara, California. “He’s a very quiet person and very methodical, and tends to be pretty analytical.”

AMD, based in Sunnyvale, was never able to match Intel’s spending on new plants, equipment, research and chip design. That didn’t stop Ruiz from envisioning that AMD would challenge Santa Clara-based Intel.

‘Flying High’

In February 2003, Ruiz put his vision for the computer-chip maker on paper: He presented employees a mock magazine cover with the headline, “Flying High: AMD’s Amazing Rise to the Top.”

By introducing new technology for server chips ahead of Intel, AMD boosted its share in that market from less than 4 percent to 22 percent in the fourth quarter of 2006, according to figures from Mercury Research in Cave Creek, Arizona.

Ruiz wasn’t afraid to cut businesses that weren’t performing. In 2005, AMD spun off its memory-chip division after Ruiz had described its losses on a conference call as making him “puke.”

Ruiz received total compensation of $2.97 million in 2008, the year he left AMD. That included $1.12 million in salary and $1.36 million in option awards, according to the company’s proxy filing. He was awarded a retirement bonus of $4.4 million and got a lump-sum payment of $3 million for successfully completing the Globalfoundries spinoff.

ATI Debt

AMD’s gains against Intel stalled after it struggled to introduce new chips quickly enough to match its rival. By the end of 2008, when Ruiz left, AMD had reported nine straight quarters of losses. The company was saddled with $5.4 billion in debt after the acquisition of graphics-chip maker ATI Technologies Inc. in 2006.

Under Ruiz, AMD’s shares advanced to $42.70 in March 2006, before declining as Intel stepped up competition. The stock fell to as low as $1.62 in November 2008.

Ruiz’s solution to the company’s difficulties was “asset smart,” which he began touting to investors and analysts in 2007.

The unnamed AMD executive allegedly told Chiesi that there was a 99 percent chance that the spinoff agreement would be disclosed before earnings were announced — a prediction that came true, prosecutors said. On Oct. 7, 2008, AMD said it would offload its manufacturing arm as part of an $8.4 billion investment from the Abu Dhabi government. It reported earnings on Oct. 16.

“There’s no secrets,” said VLSI’s Hutcheson. “There’s always stuff out there and there are people able to pry it out of executives.”

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

October 29, 2009 Posted by | Uncategorized | | Leave a comment

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