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Saturday, 18 January 2014 09:28

AMD dragged to court over lacklustre Llano sales

Written by Peter Scott



Investors claim they were misled

AMD is in a bit of legal hot water and it is coming in the form of a class action suit filed by investors, alleging that AMD knowingly misled them into believing Llano APUs would do well in the market.

The suit was filed in California by investors who purchased stock between October 27 2011 and October 18 2012, reports Tom’s Hardware. The lawsuit alleges that AMD misrepresented Llano at the time of launch, claiming that the chips were going to sell well in emerging markets. In April 2012 AMD announced demand for Llano products was higher than expected and that its desktop business would rebound.

However, just three months later AMD revealed that demand for Llano desktop chips was in fact weak. AMD then reported lower than expected revenue and the price of AMD stock tumbled nearly 25 percent on the news.

In addition, investors claim AMD dismissed concerns about high inventory levels and their impact on gross margins. Eventually AMD was forced to take a $100 million inventory write-down for heaps of unsold Llano chips. This caused the stock to drop 17 percent.

However, the lawsuit is not what we would call bulletproof. The plaintiffs will have to prove AMD knowingly violated the Securities Exchange Act and took a conscious decision to misinform investors, which won’t be easy and it might prove impossible in a court of law. In addition, the slump in PC sales roughly coincided with the Llano launch and it might be nothing short of a trump card for AMD lawyers.

Perhaps investors should read a few tech sites before they choose to invest in a tech firm.

Peter Scott

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