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 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.
Sources:
Robins Geller Rudman and Dowd LLP, BeHardware
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.
52 Comments on AMD Sued for Overestimating APU Success to Investors
I can sell magical bananas to people for $100, if investors believe I am selling magical bananas without proof it's their fault for buying them. Stupid clueless investors as always...
As an investor, there is always inherent risk regardless of who says or does what; this is ridiculous.
Estimates are a mere projection, often based on past data. But with a understanding that the projection can be incorrect or become inaccurate depending on marketplace changes.
Promises are 100% concrete guarantees and reassurances. If you're in business you know there is always risk, so certified guarantees are never given. If you're buying stock its up to the investor to do their OWN research. Just like any investment, if you're buying a house or car you are required to do your OWN research.
Two completely different things.
All companys cover their asses directly and thoroughly in the investor statements clause at the end of any financial report.
Its this new entitlement mentality people have. They feel entitled not to do their own research, then complain when things don't work out. Rather than admit their mistakes, learn from it and adapt they blame others for not being successful.
If I'm a car dealer I'm going to tell customers I have twenty other people wanting this car so they buy quicker. Or if I'm selling a house I'm going to tell viewers I have another offer to make them put in a higher counter-offer. It isn't ethical but it happens in all types of businesses.I wouldn't say gambling unless you're an inexperienced investor, but if you're doing research, following trends, reacting to the market and implementing strategy its calculated risk like any other business, whereas a gamble is just luck. But I do agree nobody else is liable for any loss or profit.
But if this investment agreement and sue occurred in South Africa, AMD would be required to pay back their initial investments. We had many Financial Advisors promising good growth which never happened and at the end paid out less than their clients invested initially. We have a law that protect investors from this.
AMD has a great winning streak of court cases, most of them coming from Intel.
The complaint is based off conference call statements which alleged SEC violations. If you ever listen to any conference call from any company. They start off with a disclaimer which is read and is also in the paperwork, you also get reminded of it before the Q & A session. A lawyer(s) is always sitting in the room with the company during the Conference Calls. Further more the company is not legaly required to inform its investors of details in its day to day operations nor its deals. Case in point company don't disclose units sold of any product unless they see it as a benefit, usually we get Point Of Sale estimates once the product is sold to the consumer.
If you thought that's how it works, Microsoft would be sued left in right for Windows 8 & Nvidia would be sued for Tegra 4+SHIELD.
Unless something is discovered right now it just seams like 2 guys who are mad they bought AMD stock around 8 hoping it would go up and it crashed.
And it isn't illegal for a car dealer or a realtor to say those things, it is illegal for a large corporation to lie about how many people are interested in a product.
The two investors filing the complaint didn't ask for proof at any given time. No where in the complaint did it reference the two investors ask for information themselves. The complaint is based off Conference Calls with Q&A statements and press releases.
Might want to give it another read.
Babak Hatamian and Lussu Dennj Salvatore
vs
Advanced Micro Devices, Inc.
I'm sure we will hear about it if the Judge agrees to proceed with the case and if we don't hear about it the Judge dismissed it.