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
buggalugs
This is ridiculous. Any investor who bases their investments off the very people selling it are a little naïve. Investing is gambling, theres no way AMD could know how popular their product would be, and the investors should be prepared for worst case scenario. In the cut throat technology world, today's premium tech is obsolete junk in months.

The investment world is full of empty promises and over-hyped products or services. Get yourself some independent third party advice or put your money in something more predictable.
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#2
NeoXF
Butthurt investors + Westbro Baptist Curch-like law firm = bullshit. Of course, that is USA, where everyone who willingly does harm, both real or imaginary to themselves (be it physical, financial or otherwise) is entitled to cook up some bullshit case against potentially anything, just because they feel so and think it's a quick cash-grab.

by: buggalugs
This is ridiculous. Any investor who bases their investments off the very people selling it are a little naïve. Investing is gambling, theres no way AMD could know how popular their product would be, and the investors should be prepared for worst case scenario. In the cut throat technology world, today's premium tech is obsolete junk in months.

The investment world is full of empty promises and over-hyped products or services. Get yourself some independent third party advice or put your money in something more predictable.
Exactly. Also, it's "nice" to see all these Intel gloating hordes jizz all over themselves with snide remarks about this subject, when most of them only read the title and are clueless about what investments employ.

What's next? Butthurt angry investor Joes from 2005 prepping lawsuits against AMD that the massive share drops in the following years where deliberate, should have never bought ATI and that they've lost 500 bucks over a 3 year period?
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