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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  • Regs - Wednesday, April 1, 2015 - link

    I almost feel sorry for AMD. Like a red headed step child trying to hide the marks from the beatings it is taking at school. We know the game. The business culture accepts the risks of getting caught is far less costly than telling the truth. Someone is depositing a large check off investors.
  • Wreckage - Thursday, April 2, 2015 - link

    The problem with your analogy is that these are self inflicted wounds.
  • FlushedBubblyJock - Monday, April 6, 2015 - link

    Correct, AMD is the girl who cuts herself in the bathroom, not the redheaded stepchild, it's self inflicted.
    AMD is the girl who has bolemia.
    AMD is the skid row addict or the drunken alcoholic who won't stop ruining lives.

    Now AMD has to deal with it's abusive siblings and parents, the beating is coming.
    Following that, expect more self inflicted wounds.
  • austinsguitar - Thursday, April 2, 2015 - link

    yea... it is kind of sad. imagine that the reason the r9 300 series of amd graphics chips is taking so long is that that desperately X desperately X desperatelyX10^desperately need that series of cards to do well up against nvidia for money.... their graphics division is the only thing making money!
  • JonnyDough - Saturday, April 4, 2015 - link

    I almost feel bad for the affluent and wealthy who have money to invest. If your money is that valuable to you, invest in yourself by starting a business of your own.
  • Operandi - Wednesday, April 1, 2015 - link

    Yeah, this is too bad but it is reflective of the state of their technology vs. Intel and as a result their product. All AMD can do is ride this out until Zen gets things right for them or....... it doesn't as I don't think there will be any more chances to get it right after that.
  • extide - Wednesday, April 1, 2015 - link

    You know, that's been the story ever since the first Phenoms came out, they weren't so great but they were good enough to ride until the Phenom II, and they were decent, at least vs a Core 2 Dual/Quad but not so great when they had to fare against the first i7, and then Bulldozer was the same story again. Each one of them was supposed to be amazing and great, but they have been ok at best. It's kinda sad because I definitely want to see AMD do well and bring the fight to Intel again, but it is pretty much apparent that that isnt going to happen again as AMD's focus is sort of in different markets than Intel these days. At least they are making their own ARM core... I have always said that the Atom was a stuuupid stuupid product, and Intel shouldn't have sold off their ARM core and kept developing that and sell it for cheap and I'm sure they would be a big player in the mobile space right now!
  • Oxford Guy - Thursday, April 2, 2015 - link

    The horrible Eee PC was a huge hit in the market and then people realized that it was a piece of junk. The Eee PC was the tech world's equivalent of the Cabbage Patch doll. Most review sites, though, certainly didn't shy away from hyping them. Then, once their popularity dropped to nothing, they acted like netbooks weren't a great idea. Pairing the power sipping Atom with a ridiculously crappy GMA 900/950 that used like 3 times the power was something that should have gotten Intel, and Asus, laughed back to the drawing board. Then there was the 800 x 480 screen, 512 MB of RAM, 3 hour battery life, tiny keys, Xandros, and 4 GB storage.

    That said, I got a Lenovo S-10 for a friend who wanted a cheap Mac laptop (Hacintoshed it) and it wasn't such a bad thing, despite the terrible color gamut netbooks had, and the extremely tiny trackpad.
  • duploxxx - Thursday, April 2, 2015 - link

    AMD Brazos was a way better CPU/GPU for that netbook purpose. but off course it is not from the djingle company......
  • WorldWithoutMadness - Thursday, April 2, 2015 - link

    Another funny story that Apple actually asked Intel to make chip for their first iPhone (Source: Otellini statement).
    I didn't know what happened but as the history dictates Apple went to ARM.
    By this story as well, if Intel had gone with Apple, the 'stupid product' atom could be powering every single phone out there. Maybe not all intel but everything could have been x86 platform. Everything would have different story.

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