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Intel 7nm Delay Fallout: Law Firm Launches Securities Fraud Investigation

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It appears that Intel's technical challenges with its 7nm process will be complicated by legal challenges as well. The Hagens Berman law firm issued a press release on Friday calling for investors impacted by Intel's recent stock market losses to join a potential class-action lawsuit for investors fraud. The firm also "encourages persons who may be able to assist the Firm's investigation of possible securities fraud to contact the firm."

Intel's announcement of a delay to its 7nm process sent shockwaves through the semiconductor industry last week as the company grapples with yet another delay to a process node, leading its stock price to plummet 16% over the weekend as it shed roughly $43 billion in market cap. Bernsteins noted that Intel's most recent earnings call was 'the worst we have seen in 42 years covering Intel" and that the stock is "basically un-ownable." Naturally, investors are unhappy, and the Hagens Berman law firm encourages impacted parties that held the stock before July 23, 2020, to submit their losses for possible inclusion in a class-action lawsuit. 

The firm, founded in 1993 and branded "one of the preeminent class action firms in the U.S." by Bloomberg, is investigating "whether Intel misrepresented and concealed manufacturing and performance with its next generation 7-nanometer chips." Hagens Berman cites Intel's previous assurances of a 2021 launch for the 7nm process and says "We're focused on investors' losses and whether Intel misled investors about the 7nm schedule and related manufacturing issues."

It certainly isn't uncommon to see lawyers circle as investors look to recoup at least some of their losses after drastic plunges in stock valuations, but the firm also solicits whistleblowers that can help prove that Intel knowingly misled investors: "Persons with non-public information regarding Intel should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC."

The potential class action lawsuit adds yet another task for Intel's legal machine. Intel's most recent Form 10-Q [PDF] lists several ongoing lawsuits that could impact the company, and the company says it cannot "make a reasonable estimate of the potential loss or range of losses" for several of the suits. Those include 'multiple' ongoing lawsuits for the Spectre/Meltdown vulnerabilities that have been lodged in U.S. federal and state courts (and in "certain" courts in other countries) against Intel and some of its current and former executives and directors. Intel also lists an ongoing lawsuit from the Chinese Academy of Sciences for patent infringement, along with another patent infringement suit from VLSI Technology. Intel also continues to argue the details of its 2001 lawsuit for unfair business practices against AMD. 

  • salgado18
    This is why I think companies shouldn't go public. Random people force you to make a profit, and sue you if you don't. You become accountable to an entire mass of people who don't help you do anything, don't bring anything to the company, but put a knife in your back and say "earn money or else".

    I know we shouldn't criticize the system, but it is what it is.
    Reply
  • Makaveli
    salgado18 said:
    This is why I think companies shouldn't go public. Random people force you to make a profit, and sue you if you don't. You become accountable to an entire mass of people who don't help you do anything, don't bring anything to the company, but put a knife in your back and say "earn money or else".

    I know we shouldn't criticize the system, but it is what it is.

    This is the reason I would never take a company public if I was ever in the position to make that choice.

    As soon as you are down little your own investors are kicking you in the nuts for profits.
    Reply
  • ingtar33
    there are transparency requirements for public companies. The question at hand in this lawsuit is WHEN did Intel know 7nm was having issues. The reason this is pertinent is in the last Quarter report to their stock holders they REALLY pumped up how on track 7nm was, and expressed their confidence in getting to market soon with those parts. If they knew 7nm was in trouble at the time of that report they'll lose this lawsuit cleanly. There are a lot of things a public company can do about bad news. They can hide it to a certain extent without too many issues with securities violations. For example had intel not said anything specific about 7nm in their last report to their investors then this lawsuit wouldn't happen.

    Furthermore this suit was clearly filed to DISCOVER when intel knew 7nm was in trouble. The people filing it don't know if they have a case yet, they're fishing for a case with discovery. Hence their calls for people inside intel to talk to them. They need proof intel knew 7nm was in trouble before they made their public statements to the contrary. I have a buddy who works at intel here in phoenix, and he said it was "rumored" that 7nm was running into a lot of the same issues intel has had with 10nm a while ago (6-8mo ago) which if true, then it's highly likely these lawyers have a case.

    In fact intel made a lot of really confident public remarks about 7nm in the past 6mo, both to the gaming/tech press and their investors. If intel knew those was bs when they made those comments then this will go south on them fast.
    Reply
  • nofanneeded
    salgado18 said:
    This is why I think companies shouldn't go public. Random people force you to make a profit, and sue you if you don't. You become accountable to an entire mass of people who don't help you do anything, don't bring anything to the company, but put a knife in your back and say "earn money or else".

    I know we shouldn't criticize the system, but it is what it is.

    lol , no one can "force" a Monopoly , and no one with a mind will buy shares from companies if they dont have transparency ...

    and from my experience the Large companies are the backstabbers , not the "random" guy. you will be shocked from the huge amount of corruption that exists in every huge firm.

    Do you really think that the 7nm delay is "normal" ?? no it is inside corruption.
    Reply
  • spongiemaster
    salgado18 said:
    This is why I think companies shouldn't go public. Random people force you to make a profit, and sue you if you don't. You become accountable to an entire mass of people who don't help you do anything, don't bring anything to the company, but put a knife in your back and say "earn money or else".

    I know we shouldn't criticize the system, but it is what it is.
    Normally, I view these lawsuits as frivolous and ridiculous. However, this one I was expecting and looks like there is a legitimate complaint being filed. As I said in a different thread, the CEO can't say in January that everything is going great and they're looking to get back to a 2-2.5 year process cadence, and then 6 months later say they're 12 months behind on expected yields and delaying the next release at least 6 months. There is a clear disconnect there. You can't blatantly lie to investors about your progress on production. Intel isn't getting sued just because the stock price plummeted. They're getting sued because they lied to investors which artificially kept the stock price higher than it should have been had they been truthful all along. Then the out of no where delay announcement cratered the stock price.
    Reply
  • Math Geek
    i've never cared for claimed "loses" like this. the stock price has dipped but if you don't sell then you never actually realize the loss. people have proven they have a 30 millisecond memory and will forget this as quickly as the next season of survivor comes on. the price will come back up and the world will move on.

    i'd rather see the SEC come down on them like a ton of bricks rather than some law firm pretend to care about people while claiming 90% of the settlement that will surely come. the investors will lose out for sure to the law firm that won't even flinch at taking the whole loot box and laughing as they walk away.

    i hate what intel has done but it won't matter since they will sell as many of the next 3 cycles of 14nm++++++++++++++++++++ as they currently do no matter what they perform like. fanboys and the basic prebuilt pc buyers won't know nor care so long as they get to play solitaire for free.
    Reply
  • derekullo
    Math Geek said:
    i've never cared for claimed "loses" like this. the stock price has dipped but if you don't sell then you never actually realize the loss. people have proven they have a 30 millisecond memory and will forget this as quickly as the next season of survivor comes on. the price will come back up and the world will move on.

    i'd rather see the SEC come down on them like a ton of bricks rather than some law firm pretend to care about people while claiming 90% of the settlement that will surely come. the investors will lose out for sure to the law firm that won't even flinch at taking the whole loot box and laughing as they walk away.

    i hate what intel has done but it won't matter since they will sell as many of the next 3 cycles of 14nm++++++++++++++++++++ as they currently do no matter what they perform like. fanboys and the basic prebuilt pc buyers won't know nor care so long as they get to play solitaire for free.
    Wait solitaire is free!?!?!

    The microsoft technician from New Delhi said I had to pay $10 a month to access solitaire. :tongueclosed:
    Reply
  • derekullo
    Maybe the lawyers should put away their law books and study up on CPU lithography.

    More people helping Intel couldn't be a bad thing ... unless you are AMD.
    Reply
  • gg83
    Didn't Intel have another record profit? I bet investors have now idea what 7nm even refers to.
    Reply
  • DZIrl
    And what is going to happen?
    C managers will get a bit less in bonuses, CEO might be fired but will get job in another company and several thousands workers will be laid off.
    Of course, ones who were complaining and process will be either laid off or will continue not to be listened to.
    There is a nice Linus talk about Intel. It was last week or so.
    Reply