Right before Advanced Micro Devices (NYSE: AMD) CEO Hector Ruiz received a completely inappropriate raise from his board of directors, he apologized to Wall Street for having yet another disastrous quarter. The world's second-largest PC chip maker didn't deliver any newer products to compete against a resurgent Intel (NASDAQ: INTC) and all but admitted guilt for overpaying -- by a few billion -- for Canadian graphics chip maker ATI in 2006's $5.4 billion acquisition.

AMD, once the PC chip maker to beat, has been soundly whipped by Intel in the last 18 months due to design and manufacturing efficiency leadership by the larger rival (especially from its Israeli design team). AMD seems to be "asleep at the wheel" as it shaved 40% off its market value just in the last two months alone. You can be sure that institutions holding AMD shares are quite displeased. Is Ruiz on his way out? That's the word in some circles, and his pay raise after AMD's latest quarterly nightmare definitely did not help things.

In Ruiz's defense, he's correct in that the recent drop-off in AMD's stock price "doesn't make sense," as AMD is slated to reduce capital spending by 35% to $1.1 billion in 2008 and take other moves to reduce costs. However, the company's fumbling of a highly-advanced chip product called "Barcelona" may be the leader's downfall. Even though the "four core" processor was introduced to the market in September (much later than planned), flaws surfaced right off the bat, pushing back volume production until the first quarter of next year. Ruiz responded by saying "we blew it, and we're very humbled by it . . . and we learned from it, and we're not going to do it again." That may not cut it in a market tired of excuses and missed opportunities.

[Update, 12-18-07: According to Marijke Shugrue with www.bitepr.com, Hector Ruiz did not receive a raise in 2007 -- Ruiz's compensation remained the same in 2007. The recent SEC 8-K filing that was reported as a "raise" for Ruiz last week was related to an IRS regulation adjustment. While the recent SEC filing does mention Hector Ruiz's last raise, this raise took place 18 months ago in May 2006.]