Investors sue AMD over 'false and misleading' Llano APU statements

Investors sue AMD over 'false and misleading' Llano APU statements

Summary: AMD is in hot water with investors who claim the company overestimating how well the Llano chip would do, especially in emerging markets.

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TOPICS: Hardware
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Chip designer AMD is being sued by its investors who claim the company overestimating how well the Llano chip would do, especially in emerging markets.

The class action lawsuit, filed by Robbins Geller Rudman & Dowd LLP, represents AMD investors between 27 October 2011 and 18 October 2012.

The lawsuit claims that "defendants falsely and misleadingly represented that AMD's desktop business was in a 'strong position' and that it would 'continue to rebound' in 2012."

The suit goes on to claim that "as late as April 19, 2012, defendants stated that the demand for the Llano APU was 'higher than anticipated', particularly in the 'emerging markets' and that there were no 'significant issues' in the important desktop market."

But Llano didn't pan out as expected.

In July 2012, AMD announced that weak demand for Llano APUs in desktop devices, particularly in its Chinese and European markets, and this resulted in a lower than expected revenue for the June 30, 2012 quarter.

This caused the price of AMD stock to decline by nearly 25 percent on extremely heavy trading volume.

But that was just the start. Things then got a lot worse.

"Then just weeks later," the lawsuit goes on to explain, "the Company announced that its gross margins for the fiscal 2012 third quarter declined more than 31 percent from its previous quarter, in large part, due to AMD’s recording of an approximate $100 million inventory write-down, mainly attributable to the overstated value of the Llano. On this news, the price of AMD stock declined nearly another 17 percent on extremely heavy trading volume."

AMD states that it is "aware of the complaint" and is "confident that the company's actions and statements were consistent with its obligations under the securities laws'"

Topic: Hardware

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8 comments
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  • Oh please. You don't have to be savvy to know that AMD is getting it's

    lunch eaten by intel. Not in 2012, not in 2010, not now. Anyone who thought any AMD chip would successfully compete with intel was delusional.
    Johnny Vegas
    • Good thing lunch is only one meal

      I'm excited about AMD. Getting the XBOX/Playstation deals where huge and they are getting a huge boost in the GPU market from all the Cryptocurrency mining. At least for 2014 they are positioned to do well with the niches they have assuming lawsuits don't destroy their gains.
      Brett Jorden
  • Oh-well

    They bought the stock based on company projections sadly they did not pan out. They did not purchase stock based on the actual company sales. Buying stock is always a gamble, you pay the price take your chances.
    BubbaJones_
  • This is why Due Diligence is so important

    How does that standard disclaimer go about forward looking statements?
    stfrpa1
  • They just cannot catch a break

    it seems that everyone is just out to take what they have and make it more difficult based on what they are trying to make. AMD is one of the only brands innovating in this time and everyone is trying to jump all over their stuff. While companies like Intel continue to do nothing and fail in every market other than desktop power chips with overpriced chips that only have single threaded performance.
    Jimster480
  • Investors didn't sue.

    The complaint, which is actually just a press release from an ambulance chancing law firm, is seeking to find a lead plaintiff. They actually don't have one. Meaning there is no class action suit. They also chose very specific timing where the stock went down. It recovered and ended up 2X from the starting point (as of today) but the law firm ignores the gains looking only for a short term loss. These things come out almost daily when a stock goes don for a short time in hopes to find a plaintiff and get to court. The courts regularly toss them out now as they are nearly impossible to prove. These attn.'s are known for looking for one plaintiff, then going to the company and requesting $1M to settle out of court. They don;t want to go to court...because they won't win or even get their case heard.
    kevinsurace
    • Interesting

      Thanks for the additional info. Is this a new trolling trend we are witnessing much like patent trolls? Don't like the return? Sue! That should make companies more agile and efficient, sure. /s
      djmik
    • shareholers don't sue themselves

      They own the company, so sueing the company is kind of stupid.
      It can only drive down the stock price.
      The only reason they would do this is to drive the price down for a buyout.
      If you have a problem with certain anaylsts or management in the company, you sack them.
      This suing AMD thing is a retarded story.
      warboat