There are a bunch of reasons. Specific to the cards themselves, AMDs latest aren't very efficient (as
previously discussed here). They're basically fighting the war against nividia right now by (a) throwing voltage at the problem and "overclocking" their chips, and (b) cutting prices.
A isn't really a serious problem in a desktop, because even though they do have higher power draw, it is still an overall tiny part of your monthly electric bill. But, they do have heat problems, which means they have noise problems, and then silicon running hot all the time also often has lifespan problems (though these are all fairly minor concerns).
The bigger problem is that they're having serious financial issues. They've had repeated rounds of layoffs. Scuttlebutt is that morale is terrible, and most of the good engineers have fled for greener pastures. And, on top of it, the driver teams have taken a huge hit (no new driver from them since, what, January, when they used to release them monthly like clockwork).
Making things worse, of course... They're getting it from both ends. The "ATI" (graphics) division has basically been keeping AMD afloat the past few years (since Intel fixed their problems and started whomping butt again). But now nvidia is whomping butt and AMD has to ship inefficient (and therefore big and costly) chips to compete? And now with the new 960 and 970 from nvidia, they have to drastically cut prices to compete (and those margins are what is making up for the massive losses on the CPU side)?
And, their mobile situation is, of course, even more dire. They can't get any design wins, and their big "extra" (better onboard graphics) is now seriously being challenged by Intel on the low end and crushed by nvidia on the medium and high ends.
I don't know. I'm afraid they might be a shell of their even-currently-shell-like-selves a year or two from now. Possibly gobbled up by someone.