Class Action Lawsuit against AMD

[podspi]

And why should you get a bonus in the first place for doing your job?

There is nothing wrong with incentive-based compensation, and I've never liked bagging on somebody's compensation, regardless of how much larger it is than mine.


The issue is/was AMD's management. They have either had self-serving executives that have managed to legally enrich themselves at the expensive of the company and shareholders, or they have been well-meaning but incompetent.

I keep hoping it has improved, we'll see. I do think their execution has improved since Meyer, so that is something.*


*Either that, or Intel's execution has gone downhill, so relatively AMD has improved

 

[Idontcare]

There is nothing wrong with incentive-based compensation, and I've never liked bagging on somebody's compensation, regardless of how much larger it is than mine.


The issue is/was AMD's management. They have either had self-serving executives that have managed to legally enrich themselves at the expensive of the company and shareholders, or they have been well-meaning but incompetent.

I keep hoping it has improved, we'll see. I do think their execution has improved since Meyer, so that is something.*


*Either that, or Intel's execution has gone downhill, so relatively AMD has improved

I think Lisa has a real chance of doing something with the company.

Not that it can re-attain its former K7/K8 glory but surely something akin to the years of the K6 and K6-2.

Hector truly was the "Ruinator". And Dirk just sorta maintained the status quo established by his Mentor Hector. Rory was clearly an empty suit, as evidenced by the job he was able to secure post his CEO-ship at AMD.

Lisa is fresh eyes, minds, and strategy. Maybe too late, but not too little.

The alternative is Jerry steps back in, ala a Steve Jobs or Morris Chang transition, but I don't see that in the cards.

 

[dahorns]

Allow me to clear up some confusion:

Literally all that has happened is that a judge allowed it to be filed. Nothing more, nothing less. Unless you're saying otherwise you seem bent out of shape about it.

Have a drink and stop taking things so personal.

Not entirely accurate. The case was already filed. You don't typically need judicial permission to file a case. Rather, the judge denied the Defendant(s)' "motion to dismiss."

That Judge was presented evidence and RULED the law suit has merit.. They don't just grant whatever is filed.

All that means is that the plaintiffs have brought forth non-tampered and potentially accurate information of a crime. Any decent lawyer can spin nonsense into reality.

A ruling on a motion to dismiss is not based on evidence, but rather on the allegations in the pleadings. The defendant challenges the initial complaint on the basis that the facts, as alleged, do not constitute a cause of action. Therefore, even if the Plaintiff(s) could prove everything alleged, there would still be no liability.

Here, the judge denied the motion, finding that the complaint alleges a valid cause of action. No evidence has been heard. No evidence has been weighed. Only the allegations themselves were examined.

But, please don't misunderstand. A motion to dismiss isn't a minor hurdle. It has been one of the primary weapons used by defense counsel this century. This is particularly true as to class actions, as there are two primary obstacles before serious settlement talks start: a motion to dismiss, and the certification of the class. Typically, class actions are quickly settled if the Plaintiff manages to certify the class (this is not an easy task).

If you wish to read the judge's order, it is available here: http://docs.justia.com/cases/federal/district-courts/california/candce/4:2014cv00226/273614/110

 

[NTMBK]

The alternative is Jerry steps back in, ala a Steve Jobs or Morris Chang transition, but I don't see that in the cards.

An interesting proposal, but the guy is almost 80. Maybe if he had retaken the reins when Hector left, things would have been different?

(Didn't know that Jerry was another one of the Fairchildren- those guys got everywhere!)

 

[Idontcare]

An interesting proposal, but the guy is almost 80. Maybe if he had retaken the reins when Hector left, things would have been different?

(Didn't know that Jerry was another one of the Fairchildren- those guys got everywhere!)

Cut from a different cloth, to be sure.

I had the pleasure of meeting and interacting with, one on one, Jack Kilby (inventor of the integrated circuit, as far as TI was concerned )...very unassuming character. Happy to talk shop and still be part of the industry he fostered some 30 yrs prior.

Fairchildren, love the term, but the bottom line is that they were not just brilliant engineers but also fantastic business directors.

The Dirk's of this world, as brilliant as they were, turned out to be too one-dimensional in retrospect.

Here's to hoping the world's newest generation are all the better!

 

[MiddleOfTheRoad]

This lawsuit isn't going anywhere. All you have to do is point out that AMD's stock has always been historically incredibly volatile -- we're not talking about Apple stock here. The best the plaintiffs could hope for is a settlement -- because the burden of proof backs up the defendant (AMD).

AMD claimed they were having good yields with Llano in investor meetings. They didn't mislead anyone. They clearly did because they overproduced these chips.

The writedown occurred because nobody bought them. The plaintiffs have a better chance of suing the general public for not buying the product. It's a dead end lawsuit legally -- I suspect AMD will settle this thing just to avoid paying legal fees and make it go away. This lawsuit is nearly as stupid as Apple vs. Samsung suing over the usage of rectagular shapes..... Seriously dumb.

 

[The Day Dreamer]

My hate for AMD CPUS started when I got my 4800 x2 Athlon which use to over heat quite easily and thus throttle down all the time.

Heating is still an issue for many of their processors.

 

[exar333]

Besides some christmas bonus or similar to everyone. The bonus concept is per design flawed due to the human factor. We can see it over and over again where people take risks, cutting corners, cheats and so on just to get that bonus here and now. And the bigger the bonus, the more willing they are to do things they shouldnt do. Plus why everything is so shortsighted today.

And why should you get a bonus in the first place for doing your job?

This is getting a bit OP, but bonuses can be very important. Good examples of bonuses can be profit-sharing, sales or rewarding exceptional efforts. It shouldn't be guaranteed (some places just giver everyone a 10% bonus every year - that doesn't make much sense to me...), but it can be a great tool. If there is little reward to your job, why do you do it? If you get paid the same as someone who puts in 1/2 the effort, is that really a job you want?

Anyway....hopefully AMD can get past this and 'right the ship'. AMD has a history of screwing-over their shareholders and you can only do that for so long...

 

[dahorns]

This lawsuit isn't going anywhere. All you have to do is point out that AMD's stock has always been historically incredibly volatile -- we're not talking about Apple stock here. The best the plaintiffs could hope for is a settlement -- because the burden of proof backs up the defendant (AMD).

AMD claimed they were having good yields with Llano in investor meetings. They didn't mislead anyone. They clearly did because they overproduced these chips.

The writedown occurred because nobody bought them. The plaintiffs have a better chance of suing the general public for not buying the product. It's a dead end lawsuit legally -- I suspect AMD will settle this thing just to avoid paying legal fees and make it go away. This lawsuit is nearly as stupid as Apple vs. Samsung suing over the usage of rectagular shapes..... Seriously dumb.

I don't know a ton about the history, but the allegations are fairly compelling. And, the whole volatility thing isn't much of a defense (actually, I don't think it is any sort of defense as it ignores that stock prices are based on the performance of the company). The stock fell from $8 to just under $2 . It hasn't been anywhere close to $8 since.

 

[Burpo]

Thanks for the link. Had been looking for it. It's being heard in Northern California (good luck with that AMD)..

AMD had sought to have the plaintiffs' suit dismissed on grounds that its legal theory was insufficient, but in a ruling made public on Wednesday, US District Court Judge Yvonne Rogers of the Northern District of California denied that motion and ruled that the case would go forward.

""The Court does not reach this conclusion lightly," Judge Rogers wrote in a 19-page ruling [PDF]. "In so holding, the Court has considered possible non-culpable explanations for why defendants might have stated that yields were on track when they were later exposed as not having been."

The judge found, however, that such explanations were "relatively less persuasive" than the plaintiffs' allegations and that the evidence presented in the complaint met the legal requirements for a valid lawsuit under the Private Securities Litigation Reform Act of 1995.

What's more, court documents claim, "Lead Plaintiffs believe that substantial additional evidentiary support for the allegations herein exists and will continue to be revealed after Lead Plaintiffs have a reasonable opportunity for discovery."

The lawsuit seeks damages in an amount to be proven at trial, plus interest and court costs.

In their CCAC, plaintiffs name several individual defendants: Rory P. Read (“Read&#8221,
who has been President and CEO of AMD since August 2011, and who serves on AMD’s Board
of Directors; Siefert, who joined AMD in October 2009 and served as Senior Vice President and
CFO until September 2012; Richard A. Bergman (“Bergman&#8221, who was AMD’s Senior Vice
President and General Manager of AMD’s product group from May 2009 to September 2011; Dr.
Lisa T. Su (“Su&#8221, who has served as AMD’s Senior Vice President and General Manager of
Global Business Unit since January 3, 2012 (collectively, “individual defendants&#8221. (CCAC ¶¶
33–36.) Plaintiffs claim these individuals knew of the alleged falsity and misleading nature of the
subject statements, and by virtue of their positions of control and authority, knew and recklessly
disregarded that undisclosed facts rendered the representations materially false or misleading.

At press time, AMD had not responded to The Reg's request for comment..

http://www.theregister.co.uk/2015/04/01/amd_class_action_suit_greenlit/

This suit is NOT going away..

 

[MiddleOfTheRoad]

I don't know a ton about the history, but the allegations are fairly compelling. And, the whole volatility thing isn't much of a defense (actually, I don't think it is any sort of defense as it ignores that stock prices are based on the performance of the company). The stock fell from $8 to just under $2 . It hasn't been anywhere close to $8 since.

The allegations are not fairly compelling from a legal standpoint. In a civil case it is all about proving foreseeability -- and AMD's stock price has always been a roller coaster ride. The burden of due diligence is the responsibility of the investor.... With AMD's turbulent history, Intel's historically superior market position and AMD's financial situation from the previous Bulldozer fiasco.... Only a total moron is going to argue that AMD's stock price had any chance of increasing during this period of time. The market was always going to correct this stock price. AMD's lawyer will probably get it tossed on those grounds alone.

AMD's stock price was up above $40 in 2006 before it crashed to $2 in 2008 -- it's always been a volatile stock.... That historically bounced around like a ping pong ball. An investor can't argue on these grounds -- because AMD's stock price has already collapsed several times. That's a failure of due diligence for the investor.

The stock price is based on the company's market capitalization and balance sheet. $2 a share is an accurate reflection of AMD's current market position. Dead end lawsuit. Unless they get a confession from an AMD executive admitting they deliberately lied, legally the plaintiffs have nothing.

http://www.nasdaq.com/symbol/amd/historical

 

[exar333]

The allegations are not fairly compelling from a legal standpoint. In a civil case it is all about proving foreseeability -- and AMD's stock price has always been a roller coaster ride. The burden of due diligence is the responsibility of the investor.... With AMD's turbulent history, Intel's historically superior market position and AMD's financial situation from the previous Bulldozer fiasco.... Only a total moron is going to argue that AMD's stock price had any chance of increasing during this period of time. The market was always going to correct this stock price. AMD's lawyer will probably get it tossed on those grounds alone.

AMD's stock price was up above $40 in 2006 before it crashed to $2 in 2008 -- it's always be a volatile stock.... That historically bounced around like a ping pong ball. An investor can't argue on these grounds -- because AMD's stock price has already collapsed several times. That's a failure of due diligence for the investor.

The stock price is based on the company's market capitalization and balance sheet. $2 a share is an accurate reflection of AMD's current market position. Dead end lawsuit. Unless they get a confession from an AMD executive admitting they deliberately lied, legally the plaintiffs have nothing.

http://www.nasdaq.com/symbol/amd/historical

Very true.

Just looking at the last 10 years....up to 45 (2006), down to 2 (2008). Up to 10 (2010), down back to 2 (2013). Up to ~4 (2014) and then back down to ~2 (2014). Not a great trend, but definitely volatile...

 

[Burpo]

Unless they get a confession from an AMD executive admitting they deliberately lied, legally the plaintiffs have nothing.

There is notation of Confidential witnesses and more to be discovered.. This suit is not going away..

In support thereof, plaintiffs reference several confidential witnesses (“CWs&#8221
as attesting to the fact that GF was “struggling” “throughout all of 2011” to improve yields.
(CCAC ¶ 93.) Plaintiffs further reference a CW statement that “everyone at AMD and GF [was]
‘flipping out’ over the Llano yield problem.” (CCAC ¶ 104.) The Court finds these allegations to
support a finding for purposes of the instant motion that the statements indicating “on target” yield
were false when made.

https://cases.justia.com/federal/di.../4:2014cv00226/273614/110/0.pdf?ts=1427879634

 

[thilanliyan]

The only way this system would have any sense of fairness to it is if the incompetent employees were financially liable for the economic havoc they wreaked on both the company and the shareholders alike.

A little bit of personal risk to go alongside all of that personal reward they raked in for a year or two while tanking the business.

Unfortunately corporation actions can't be passed onto individuals can they?

 

[MiddleOfTheRoad]

Plaintiffs claim these individuals knew of the alleged falsity and misleading nature of the
subject statements, and by virtue of their positions of control and authority, knew and recklessly
disregarded that undisclosed facts rendered the representations materially false or misleading.

Without an outright confession from an AMD executive -- it will still be nearly impossible to prove negligence on the part of AMD's management. Further, since 32 nm SOI was getting good yields for Bulldozer (and Llano used the same process) -- AMD's management could have simply made a bad assumption about its future yields. This lawsuit just screams desperation from some incompetent fund managers trying to point the finger. (When the fund managers themselves screwed up by investing in a company whose fundamentals were going to drive the stock lower due to market forces).

 

[Burpo]

Read the order.. "Several Confidential Witnesses"

 

[mrmt]

AMD claimed they were having good yields with Llano in investor meetings. They didn't mislead anyone. They clearly did because they overproduced these chips.

Nope, that's not what AMD said and that's not what the plaintiffs are complaining. Yields are not the crux of the issue on the lawsuit, AMD sales forecast and inventory turn over are.

AMD first denied the yields problem, but by the time of the launch they admitted it and said that they couldn't sell more chips because of these yields problem, but since those problems were solved and there was big commercial interests in the chip sales would go up. Since there wasn't commercial interest in the chip, AMD ended up choking with inventory and had to make a write down.

I think a good lawyer will make mincemeat of AMD's defense strategy, because the statements made by AMD executives don't really leave room for doubt that they were very upbeat about Llano turn over, and that this turn over in fact didn't exist.

 

[MiddleOfTheRoad]

There is notation of Confidential witnesses and more to be discovered.. This suit is not going away..

Again, an engineer wouldn't be enough. It would need to be an executive making the confession that he intentionally misled the investors. Unlikely to happen.

The basis of the case: "AMD allegedly misled its investors over how popular its first generation "Llano" desktop APU would get, claiming that there were much greater prospects for the APU than it actually ended up selling."

Seriously, yeah -- that's the basis of this lawsuit. "My product is like going to the most popular chip ever made." They are suing AMD management for over-hyping a product. Yeah, good luck proving that case on a legal standing. This case is going nowhere because of the legal slippery slope. Suddenly, stockholders would sue every manager who misses sales projections -- which happens nearly every quarter for millions of companies. Surface RT writedown, anyone? Blackberry's billion dollar inventory writedown? Not only were these writedowns much larger than AMD's, but writedowns are incredibly common in the semi-conductor industry (if they can prove the frequency of writedowns in their respective market segment -- it's already game over legally).

http://www.techpowerup.com/196941/amd-sued-for-overestimating-apu-success-to-investors.html

This screams settlement.

 

[CHADBOGA]

I wonder what impact this lawsuit will have on AMD's financial shape?

 

[Burpo]

I can attest that California courts are NOT sympathetic in matters such as this. The Judge has heard enough to be convinced that AMD needs to answer for their actions. I actually feel for AMD on this.. They better settle if they can.. I predict the ending will not be good for them otherwise.

"The Plantiff seeks to recover damages, who are represented by Robbins Geller, a firm that specializes in class action suits against companies that mislead their investors in a very big way."

 

[Arachnotronic]

I wonder what impact this lawsuit will have on AMD's financial shape?

Realistically, probably negligible.

 

[mrmt]

The basis of the case: "AMD allegedly misled its investors over how popular its first generation "Llano" desktop APU would get, claiming that there were much greater prospects for the APU than it actually ended up selling."

AMD *stated* to investors that sales of their Llano APU were fine, but they weren't. This is the basis of the lawsuit.

 

[cytg111]

This is why personal responsibility for leadership jobs is needed. And why bonuses are one of the most destructive things there ever is with its shortsighted behaviour. Its all about here and now and never about later. If it goes it goes, else they just dump it on someone else.

(Every once in a while i guess).. I agree with the above 100%, in my pov it is extreme capatalizm short-circuiting it self. While it may be good for driving a number of things, it is not without its faults and at a certain level the concentration of power/money vs liability is just not in balance and corruption follows.

 

[MiddleOfTheRoad]

AMD *stated* to investors that sales of their Llano APU were fine, but they weren't. This is the basis of the lawsuit.

From what I read of the legal brief -- the case hinges on sales projections. AMD management can't get sued for actual sales figures -- those are reported at the end of each quarter (after they happen). That is exactly why this case is probably a non-starter. The basis of this lawsuit is on what AMD management had estimated. Managers fail to hit sales estimates all the time, there is nothing to see here.

Without actual misconduct, the burden of proof will be nearly impossible to prove. We'll know more when the witnesses actually disclose unless the witnesses can prove otherwise.

Robbins Gellar put themselves on the map for taking on Enron -- and winning big. But AMD's management was inept, not corrupt (like Enron clearly was). There is a distinction.

 

[Genx87]

From what I read of the legal brief -- the case hinges on sales projections. AMD management can't get sued for actual sales figures -- those are reported at the end of each quarter (after they happen). That is exactly why this case is probably a non-starter. The basis of this case is on what AMD management had estimated.

If management makes the claim their sales guidance is fine or expected to be within a certain range and misses it wildly they are in a position to be held liable. They know what their sales are at the time of making the projection. They also have an idea of expected bookings. If they are wildly off it can only be because they mislead.