In a bit of news that’s unfortunately not an April Fool’s joke, a US District Court has ruled that AMD must face claims from investors over potential securities fraud committed by the company.

At the heart of the matter is AMD’s Llano APU. Launched in 2011, in Q3 of 2012 AMD had to take an inventory write-down of $100 million on unsold Llano inventory, as the company had to further reduce prices on the chips in order to sell them in the face of competition from Intel along with the ramp-up of their own Trinity APUs. The writedown in this case did not directly cost the company $100M, but it essentially reduced the value of the company by that much to AMD’s shareholders, whose stock in turn suffered a hit in value.

What makes this writedown lawsuit material are the events that led up to it and how AMD handled it. The participating investors are accusing AMD of committing securities fraud over how they presented the state of Llano production. The suit claims that Llano production was not as strong as AMD was claiming – a consequence of supply issues with GlobalFoundries’ 32nm process – and as a result AMD artificially inflated the value of the company in 2011 and 2012, and in the process produced too many Llano chips once GlobalFoundries was finally able to catch up. This in turn led to AMD’s $100M writedown and overall decline in value of the company and its stock price (with AMD losing about ¾ of its peak value in 2012).

These types of lawsuits are not particularly uncommon, especially as institutional investors seek restitution for money they lost from the drop in stock price. That said, today’s ruling is only over whether the lawsuit can go to trial and not over the validity of the claims themselves, never mind what specifically the investors are asking for. So it is likely that the actual lawsuit will take quite a bit longer to resolve.

Source: Reuters (via SH SOTN)

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  • Thermalzeal - Friday, April 3, 2015 - link

    AMD has been quite a disappointment especially after the bulldozer fiasco. I remember the day that it came out I was so torn that it was complete garbage that I went and bought an X6 1150 instead. I've finally upgraded again and got an 8350, and luckily the upgrade path (especially with windows 8.1) didn't even require new memory or an OS reinstall. But Alas, the enthusiast desktop market is dead and the whole Megahurtz myth has derationalized the consumer purchasing process. Even Intel is scared about the lack of "giving a hoot" about processors especially since the real performance is now being moved to things like Nvidia's Tesla, and related GPU compute. The markets have just dried up though, as there is really no significant gain to me between my X6 and my 8350 or an i7, apart from gaming.
  • Byte - Friday, April 3, 2015 - link

    Its the sad truth. I'm trying to look for a decent 17" laptop, but there isn't anything good out there for under $1200. For some reason most of dells consumer laptops, even 17" ones use ULV chips! What in the world? They don't give a damn about performance anymore because everything is just good enough.
  • Crunchy005 - Friday, April 3, 2015 - link

    Welcome to intel having very little competition from AMD right now. Really hoping zen gives intel a bit of a kick in the butt. I feel broad well and skylake are intel making it look like they are innovating and hardly any performance gap from haswell just lower TDPs which half the time they get by just under clocking the stupid things. Fanless coreM, ya they run at 1Ghz wonder how they hit that TDP...
  • mikato - Wednesday, April 8, 2015 - link

    Yeah, this is a major problem for me. No ULV chip thanks. Never had a laptop but I may be doing most of my work on one soon and am dreading it.
  • wiyosaya - Thursday, April 9, 2015 - link

    I have to say that I would put this in the whiney investors category - they lost money, poor them. IIRC, AMD never said they would have a chip that would outsell the equivalent Intel chips. They touted what they were doing, but they never said anything remotely like "this chip is going to kill Intel." The whiney investors with lots of money lost a few dollars, too bad. It happens in investments all the time. Is there a follow up to this article? I would love to hear whether the whiney investors got their way.

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