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AMD Faces Lawsuit Over Llano APU Sales

By - Source: Robbins Geller Rudman & Dowd LLP | B 81 comments

This lawsuit alleges that AMD violated the Securities Exchange Act.

AMD is currently facing a class action suit by Robbins Geller Rudman & Dowd LLP who on Wednesday filed the complaint (pdf) in the United States District Court for the Northern District of California. The suit is on behalf of purchasers of AMD common stock between October 27, 2011 and October 18, 2012, aka the "class period," and accuses AMD of violating the Securities Exchange Act of 1934 over its "Llano" APU.

Essentially, the lawsuit claims that AMD misled its investors by using statements that led them to believe that the 32 nm "Llano" first-generation APU had better chances on the market than it really did. Here's more directly from the lawsuit:

During the Class Period, defendants repeatedly highlighted the “strong” and “significant” interest in, demand for, and unit shipments of, its Llano APUs. Defendants falsely and misleadingly represented that AMD’s desktop business was in a “strong position” and that it would “continue to rebound” in 2012. 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. Defendants, however, concealed that demand for Llano APUs in desktop devices was much weaker than suggested by their statements, especially in its Chinese and European markets.

In July 2012, AMD revealed a weak demand for Llano APUs in desktop devices, particularly in the Chinese and European markets. That resulted in AMD reporting a lower than expected revenue for the June 30, 2012 quarter. This, in turn, caused the price of AMD stock to decline nearly 25 percent on extremely heavy trading volume.

The lawsuit alleges that AMD execs "deceptively dismissed" the notion that the company's future gross margins would be "adversely affected by the large amount of unsold Llano inventory, when such inventory was unsalable, even at heavily discounted prices."

Weeks later, AMD 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.

Two plaintiffs are listed in the class action suit, as they purchased stock during the Class Period and were "damaged" by the stock drop. They're seeking damages on behalf of all purchasers of AMD common stock during that period of time.

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  • 28 Hide
    viewgamer , January 17, 2014 6:35 PM
    "We have no idea how the stock market works give us money !! " rabble rabble rabble !
  • 20 Hide
    rolli59 , January 17, 2014 6:20 PM
    That is funny, I guess investors should visit some hardware sites before investing.
  • 14 Hide
    iknowhowtofixit , January 17, 2014 7:11 PM
    Hmm, AMD starts to gain traction with APUs and GPUs, looking good for 2014. Then, a magic lawsuit appears for a product from 2011?I wonder who is paying for the lawyers? A distant subsidiary of a competitor?
Other Comments
  • 20 Hide
    rolli59 , January 17, 2014 6:20 PM
    That is funny, I guess investors should visit some hardware sites before investing.
  • 28 Hide
    viewgamer , January 17, 2014 6:35 PM
    "We have no idea how the stock market works give us money !! " rabble rabble rabble !
  • 7 Hide
    goodguy713 , January 17, 2014 6:41 PM
    well they did say they gave up on the performance war more than a few years ago so who could blame them .. if some one would of done their research they would of known that those apu's are pretty sub par even compared to phenom 2 series. the current kaveiri are pretty much lack luster at the moment with no software to take advantage of the hsa they hyped up. I have high hopes for hsa and mantle but I wouldnt personally buy an apu for a desktop. maybe a media center device or a small form factor just to cut costs on a dedicated gpu. which is its entire value yea they might be good enough for your average user light years ahead of anything you could purchase back in 2000 but now days with intel having such a strong lineup its no wonder people are concerned.
  • 10 Hide
    ingtar33 , January 17, 2014 6:48 PM
    this is a fishing expedition... what they're hoping for is access to corporate documents during discovery which will show some sort of shady business practice which defrauds investors. without that type of "discovery" this case won't even make it to court.
  • 10 Hide
    masmotors , January 17, 2014 6:58 PM
    i hope they lose and amd wins the gamble you take with stocks and amd apu are great better than intel igp hands down they are trying to pull a fast one
  • 14 Hide
    iknowhowtofixit , January 17, 2014 7:11 PM
    Hmm, AMD starts to gain traction with APUs and GPUs, looking good for 2014. Then, a magic lawsuit appears for a product from 2011?I wonder who is paying for the lawyers? A distant subsidiary of a competitor?
  • 5 Hide
    rdc85 , January 17, 2014 7:33 PM
    IMO they are stupid investor by just buying whatever the company said and don't do research by it's own...

    or they too clever, try to make money from nothing using this lawsuit.......
    (they should already known that market full of lies and deceives, it just how it was)
  • 5 Hide
    hp79 , January 17, 2014 8:05 PM
    So I still made $1666 during those times, do I still sign up for the class lawsuit?
  • 8 Hide
    bustapr , January 17, 2014 8:06 PM
    these investors dort of deserve to lose their money if they have yet to understand that investing is at times unpredictable and spontaneous. AMD believe and had reason to believe that the APU would be a success because it had what alot of people wanted, which was a decent IGP and usable cpu all in one chip. it is indeed something people would want. sadly for them, the stocks were declining and sales were less than expected at the time. Thats how the market works at times, its all about gambles with a company like amd. If you lose your money on a gamble, then boohoo, dont complain to court about it.
  • 2 Hide
    RupertJr , January 17, 2014 8:12 PM
    http://img.photobucket.com/albums/v327/bo5ton/simpsonsoftheweek/Homr/19.gifHomer: "I'd like to buy 500 shares of animotion incorporated."Man: "Ok. Ah now before I execute this order are you sure you understand the risks of stock ownership?"Homer: "Absolutely."Homer imagines...http://img.photobucket.com/albums/v327/bo5ton/simpsonsoftheweek/Homr/20.gifSong playing: We're in the money!
  • 2 Hide
    RupertJr , January 17, 2014 8:17 PM
    maybe Intel is influencing those guys to try to sue AMD? Who knows... Intel is very well known for anti trust practices...
  • 0 Hide
    hp79 , January 17, 2014 8:24 PM
    delete (duplicate)
  • 10 Hide
    iknowhowtofixit , January 17, 2014 8:28 PM
    Quote:
    Maybe because APUs are garbage. It's a made up market because they lost so badly to intel.


    If APUs are garbage, why is Intel following suit? Most consumer Intel CPUs are APUs...
  • 11 Hide
    Spartan191 , January 17, 2014 9:34 PM
    Oh wow they're filing a lawsuit because they didn't get enough money... Talk about butt hurt.
  • -1 Hide
    arb1 , January 17, 2014 11:06 PM
    Quote:
    Quote:
    Maybe because APUs are garbage. It's a made up market because they lost so badly to intel.
    If APUs are garbage, why is Intel following suit? Most consumer Intel CPUs are APUs...
    Um So Sandy bridge intel cpu was released in feb 2011 and Llano wasn't released til June that year. So who followed who?
  • -3 Hide
    arb1 , January 17, 2014 11:08 PM
    As for things, AMD over last bunch of years tend to make claims above what the end product ends up being. They claimed bulldozer was gonna get them in the game then well it was complete crap. So real shock in all this, there hasn't been MORE lawsuits over these issues.
  • 0 Hide
    DjEaZy , January 17, 2014 11:19 PM
    ... but... it could make a precedent, to sue big giants, that caused the big financial meltdown...
  • 6 Hide
    torka , January 17, 2014 11:21 PM
    This is dumb
  • -2 Hide
    hybird9012 , January 18, 2014 12:05 AM
    I understand the lawsuit against EA but I don't understand this one... I think the "defendants" aka trial lawyers, just want to find a way to steal someone else's money.
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