Thursday, January 16th 2014

AMD Sued for Overestimating APU Success to Investors

Some investors in AMD, who purchased company stock between October 27, 2011 and October 18, 2012, filed a class action lawsuit against AMD, through law firm Robbins Geller Rudman & Dowd. The class action alleges that AMD and its officers and directors committed violations of the US Securities Exchange Act of 1934. AMD allegedly misled its investors over how popular its first generation "Llano" desktop APU would get, claiming that there were much greater prospects for the APU than it actually ended up selling.

The law firm detailing its suit writes:
The complaint alleges that during the Class Period, defendants made false and misleading statements about the Company's business and prospects. Specifically, the complaint alleges defendants made false statements and/or concealed adverse facts regarding AMD's 32 nanometer Llano (the "Llano") Accelerated Processing Unit ("APU"), which is a type of microprocessor that combines AMD's central processing unit and its graphics processing unit onto a single piece of silicon, including repeatedly highlighting the "strong" and "significant" interest in, demand for, and unit shipments of, the Llano APUs, and falsely and misleadingly representing that AMD's desktop business was in a "strong position" and that it would "continue to rebound" in 2012. As a result of defendants' false statements, AMD stock traded at artificially inflated prices throughout the Class Period.
When AMD announced its Q2-2012 results in July of that year, it became clear that there really wasn't the kind of demand for the APU that AMD was playing up, AMD in its IR release stated that the markets where it most expected the APU to sell - China and Europe, had lukewarm reception of "Llano." This caused a fire-sale of AMD stock, when it saw a fall by almost 25 percent on extremely heavy trading volume. In the following quarter, on October 28, 2012, AMD announced a decline in its gross margins for Q3 2012 declined 31 percent QoQ, due in part to the $100 million inventory write-down, following which AMD stock declined another 17 percent in a flash.

The Plantiff seeks to recover damages, who are represented by Robbins Geller, a firm that specializes in class action suits against companies that mislead their investors in a very big way. It would be interesting to see how this case plays out, given that readers of content on sites like ours most likely knew how fast AMD's K10 CPU and VLIW5 GPU architectures were (given that they had each driven AMD's product stack for several years), and what to expect from Llano, way back in 2011.Source: Robins Geller Rudman and Dowd LLP, Image Credit: BeHardware
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52 Comments on AMD Sued for Overestimating APU Success to Investors

#1
ensabrenoir
.......in a twisted positive note....i guess they feel now Amd is and will be making enough money to be sued. ...if this happens..... its back to -1 for amd again... just when things APPEARED to be heading in the right direction. :shadedshu:

....and just how inflated was the price of stock ......
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#2
FreedomEclipse
~Technological Technocrat~
by: ensabrenoir
.......in a twisted positive note....i guess they feel now Amd is and will be making enough money to be sued. ...if this happens..... its back to -1 for amd again... just when things APPEARED to be heading in the right direction. :shadedshu:

....and just how inflated was the price of stock ......
Or maybe it just took a while to compile the evidence and dig deep enough into the financials. As usual AMDs hype machine banging the drum for the APU... Even when theres no market for them. APUs are great for htpcs and low to low/mid range gaming but an i3 4130 will still destroy it when it comes to processing power. An APU for mobile usage makes a lot more sense than in a desktop imo. Hybred crossfire has never really worked and we can only hold our breath to see if mantle really delivers what it promises
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#3
TRWOV
What to the who now? So shareholders are just going to sue when companies don't meet projected sales? Now if AMD indeed made up numbers out of thin air then yeah, that's fraud but failing short of an honest estimate isn't.

Me smells lots of butthurt "investors" (there's always a risk involved with investments).
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#5
FreedomEclipse
~Technological Technocrat~
by: TRWOV
What to the who now? So shareholders are just going to sue when companies don't meet projected sales? Now if AMD indeed made up numbers out of thin air then yeah, that's fraud but failing short of an honest estimate isn't.

Me smells lots of butthurt "investors" (there's always a risk involved with investments).
by: suraswami
Shows investors are dumb!
Maybe AMD shouldnt make promises it cant keep
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#6
Jorge
We're seeing a lot of fishing expeditions by investors in the past few years when their bets don't deliver the returns they hoped for. Virtually all SEC financial reports have disclaimers about performance past and future so these folks will have a tough sell to a judge or jury.

AMD like most companies have no crystal ball. They can only state what they believe to be true at a specific point in time. Unless they knowingly misled investors this suit will be dismissed.
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#7
fortiori
So long as they aren't obfuscating their books to the point that it is quite literally impossible to make heads or tails of their balance sheet (*ahem*), the investors have no case here. Guidance and expectations are squishy assurances at best and any investor that goes in thinking otherwise deserves what they get and probably needs to think long and hard about leaving the casino and never coming back. This lawsuit is a disgrace.

That being said, AMD could stand to learn a little more about the merits of under promising and over delivering because their longstanding strategy of doing exactly the opposite is really starting to damage their credibility.
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#8
esrever
by: FreedomEclipse
Maybe AMD shouldnt make promises it cant keep
AMD didn't make any promises to its share holders, it only gives its estimates. Maybe you shouldn't make statements you don't understand.
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#9
damric
I subpoena btarunr as a witness to give expert testimony.
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#10
FreedomEclipse
~Technological Technocrat~
by: esrever
AMD didn't make any promises to its share holders, it only gives its estimates. Maybe you shouldn't make statements you don't understand.
In this case, estimates/promises their all the same and AMD didnt deliver - thats the bottom line
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#11
v12dock
Inflated the stock from $2.01 to $2.02 :laugh: Investors shouldn't look to AMD for making serious money
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#12
dir_d
by: FreedomEclipse
In this case, estimates/promises their all the same and AMD didnt deliver - thats the bottom line
Actually no they are not the same.
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#13
brian111
by: FreedomEclipse
In this case, estimates/promises their all the same and AMD didnt deliver - thats the bottom line
Since when has that been grounds to sue? I don't know if this has any merit but I think they will have to show something more than that otherwise a lot more companies could be held liable.
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#14
craigo
Microsoft surface....
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#15
Dave65
by: FreedomEclipse
Maybe AMD shouldnt make promises it cant keep
You should understand what you are talking about before you go spouting off about something you have no clue about!
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#16
FreedomEclipse
~Technological Technocrat~
by: Dave65
You should understand what you are talking about before you go spouting off about something you have no clue about!
Actually i do, and its my own opinion so deal with it
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#17
Xzibit
by: FreedomEclipse
Actually i do, and its my own opinion so deal with it
Not sure you do so deal with it.

If you bothered reading it. Its a complaint by just 2 guys [Babak Hatamian and Lussu Dennj Salvatore]. There calling for more people to join in the suit.

Reading more of the filing it just seams they bought at the wrong time. In the report they site that prior Quarter before they purchase stock AMD was up 8%.
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#19
TRWOV
Class suit trolls. Had forgotten about them.
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#20
Mussels
Moderprator
sure, making it into the two current gen, just laucnehd consoles is nothing to be happy about. someone just felt like suing to get rich quick.
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#22
Recus
I feel bad for them. When you invest your money you want physical benefit. Not a empty PR slides.
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#23
arterius2
this is pretty hilarious, I almost spew coffee out of my nose when I read this. LOL
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#24
john_
For months now many "analysts" and others who are playing with the stock market are trying to short the stock and push it down to $2.5. This is nothing more than one more effort to push the stock price down. I am pretty sure many who where betting on AMD's disaster all losing money every day, especially now with the share price over $4.
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#25
TheLaughingMan
I thought the whole "Stock market" thing was a gamble to begin with. You can't really get made if you got burned on what turned out to be not as big a sale as the company hoped. They sold you a possibility, a projection, a theoretical outcome, a stock if you will. You lost, they lost, we all lost so just suck it up and move on.

Grossly misleading is me selling you a stock for a company and then I just run off with your money cause the company never really existed. That is a f*$@ing crime.
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