Class Action Lawsuit against AMD

[mrmt]

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. That is exactly why this case is probably a non-starter. The basis of this case is on what AMD management had estimated.

Again, forget the projections. It's not about missing a sales forecast, but about giving a sales forecast management already know it won't be able to achieve because the underlying premises are known to be false.

The projections are only relevant in the context that AMD was giving investors targets they know they couldn't reach at the time, but the most relevant fact is that the underlying premises supporting these projections were know to be false at the time by AMD management, but despite this they provided an unreal guidance to investors.

In this case, AMD knew first it wouldn't have enough Llano chips to reach their sales forecast but alleged that the 32nm yields were fine, and later they downplayed the inventory build up that was forming by telling investors that inventory was fine and commercial interest in the chip was ok, when in fact they were choking with that inventory.

 

[MiddleOfTheRoad]

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.

Incorrect, sales estimates are exactly that -- estimates. Just because management ships a certain volume to the store doesn't mean the inventory will automatically sell. All AMD needs to prove their case is that it shipped the # of units inline with their projections given to investors. If the consumers failed to buy them -- management can't be held liable for it.

Considering business schools always train management majors to CYA (cover your ass) -- I seriously doubt this lawsuit is going to do much beyond trying to save face for a couple of incompetent fund managers. I don't think they'll get AMD executives to admit they broke the law.

 

[Genx87]

Incorrect, sales estimates are exactly that -- estimates. Just because management ships a certain volume to the store doesn't mean the inventory will automatically sell. All AMD needs to prove their case is that it shipped the # of units inline with their projections given to investors. If the consumers failed to buy them -- management can't be held liable for it.

Considering business schools always train management majors to CYA (cover your ass) -- I seriously doubt this lawsuit is going to do much beyond trying to save face for a couple of incompetent fund managers. I don't think they'll get AMD executives to admit they broke the law.

Estimates that are off or misleading does make management liable. Management knows their supply channel. Investors ask them how a specific product is performing and expected to perform in the coming qtr. Management provides guidance. Management always has the opportunity to decline guidance if they believe they truely dont know. That would be the CYA you are talking about.

AMD would had known by the time they made the guidance whether the channel was over saturated or not. Having a large over supply of chips doesnt happen over night. It takes weeks or months to build up.

 

[MiddleOfTheRoad]

AMD would had known by the time they made the guidance whether the channel was over saturated or not. Having a large over supply of chips doesnt happen over night. It takes weeks or months to build up.

You just proved the contrary point. Had AMD management been aware the channel was over-saturated, they would have backed off production earlier and not have been forced to take the writedown. Perhaps you should join the legal team for the defendant -- because you just proved they probably weren't aware of the problem (thus, didn't mislead the investors).

 

[mrmt]

Incorrect, sales estimates are exactly that -- estimates.

Was AMD in conditions to achieve that sales forecast they were giving to investors? No, they weren't, because of the yields problems they knew they wouldn't have enough chips in 2011 to achieve their sales projection, and they knew that well before they were hyping the product. Basically they were giving investors a sale forecast they knew they would fail to reach.

Was inventory management fine like AMD managers stated until write down? No, AMD was choking with Llano inventory and had to write down $100MM of Llano chips, and this fact was known to AMD management by the time they were assuring their investors that inventory was fine.

It's clear that AMD fed their investors with false information, what's left for discussion is whether they did this due to incompetence and mismanagement or they did this in bad faith. I wouldn't rule out bad faith, especially with a company with such a toxic governance and shoddy internal controls like AMD.

 

[Genx87]

You just proved the contrary point. Had AMD management been aware the channel was over-saturated, they would have backed off production earlier and not have been forced to take the writedown. Perhaps you should join the legal team for the defendant -- because you just proved they probably weren't aware of the problem (thus, didn't mislead the investors).

My point on that is they had to know, not that they hadnt been informed. If they didnt know their own supply channel. Then making guidance on misinformation is just as bad. You should work for the plantiffs.

 

[Phynaz]

You just proved the contrary point. Had AMD management been aware the channel was over-saturated, they would have backed off production earlier and not have been forced to take the writedown. Perhaps you should join the legal team for the defendant -- because you just proved they probably weren't aware of the problem (thus, didn't mislead the investors).

Read the judges decision.

 

[Fjodor2001]

Should Intel be sued over false 14 nm projections and delays?

 

[Genx87]

Should Intel be sued over false 14 nm projections and delays?

Did these delays affect sales in a significant way that lead to Intels stock price crashing to 1/4th its previous value? I'd guess not.

 

[mrmt]

Should Intel be sued over false 14 nm projections and delays?

I don't know, did you find Intel management statements and cross check with know published facts to see whether Intel management lied or not? I just don't recommend you to do it here, and this can be a real money maker case.

In any case, you should grab more popcorn and wait for more AMD lawsuits, because Kumar statements will also become an expensive game for AMD. At least this should force the company to be a little more forthcoming in the Q&As with investors.

 

[Fjodor2001]

Gotta love the system though.

AMD's incompetent employees take home bonuses and salaries as compensation for their incompetence at the time...then they depart the company (after having laughed all the way to the bank) only to leave shareholders and new management as the bag holders of a hobbled and less-robust company than when they were employees.

And to add insult to injury, the existing shareholders (and existing employees) get to absorb the economic hit of a lawsuit regarding the incompetence of past employees.

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.

Standard top management business practice these days. Ask not what you can do for the company, ask what the company can do for you...

 

[Fjodor2001]

Did these delays affect sales in a significant way

Yes, most likely. If not, it wouldn't be seen as problematic for Intel. But we all know the delays in relation to earlier promised plans have been a problem for Intel.

 

[frozentundra123456]

Realistically, probably negligible.

Yea, the only major financial impact will probably be on the law firms!!

In general, this is a grey area in my mind. I dont know enough of the full facts of this case to comment too much on it. However, to me, it is a fine line between missing a prediction, or being late with a product, and deliberately deceiving investors. If you could be sued for over-hyping a product AMD could be sued for almost every product release, and intel is getting there too. However, it is more than that. I think this case comes down to claiming that there were yield problems and then suddenly having so much inventory that they had to write it down. It is not simply over-estimating demand, but failing to see the inaccuracy of the prediction in time to adjust production, while still claiming demand was higher than they knew it was.

 

[MiddleOfTheRoad]

My point on that is they had to know, not that they hadnt been informed. If they didnt know their own supply channel. Then making guidance on misinformation is just as bad. You should work for the plantiffs.

Again, you are ignoring the legal basis of the case. Its not even good enough to have AMD management even know -- you can still discount the yields comments as human error or optimism.

In order to actually win on the legal grounds, you would need AMD executives to come forward with an admission of guilt in regards to intentionally deceiving investors (as former Enron employees had done). I don't see that happening -- thus, I just don't see this case going anywhere.

You could line up 30 engineers complaining about lousy yields. But seriously, we're talking about Global Foundaries -- name a single product that they've ever executed on time with good yields (it's hyperbole, but still). Exactly...... The burden of proof isn't on the plaintiff's side.

 

[Burpo]

According to a seasoned US Federal Judge, it is..

 

[aigomorla]

ok.... so here is what i take from the article...

A lawyer representing the platniff has filed faults in what AMD has done.
A Judge has read and reviewed the filing, and considered them valid faults.
A Court system now has informed AMD there is a ruling filed against them, and to prepare whatever evidence they have on there defense.

A verdict has NOT been given on if AMD was in the wrong.

How will AMD handle this?
Like how most corporate companies this size does.
Lawyers will meet with lawyers and make an offer to drop the case.
A Settlement will try to be given which doesn't involve going to court.
If settlement amount is too great, then they will goto court.

Usually even if AMD has counter evidence to prove innocent, if settlement fee's are within a margin of acceptance, they will just pay it out.
Only if they ask for a insane amount of money, or if the CFO is just a hard ball person, and refuses to pay, they will goto court and fight it.

 

[frozentundra123456]

This is why in general, I dont like class action lawsuits. Usually no decision is really ever made and some settlement is made out of court. I feel this both encourages frivolous suits (dont really have to prove anything, just make enough trouble for the company so it is easier to pay off than pay the legal fees) and allows companies to avoid accepting blame in more serious suits, again because the legal system is so slow and expensive, it is better to just accept a settlement without trying to prove guilt.

And usually after all the time and legal fees, the end benefit to the consumer is minimal.

 

[dahorns]

Ugh... this thread hurts my head.

(1) MiddleoftheRoad - listen to mrmt. He has a bunch better grasp of the law related to this case. Would an outright confession from AMD management be good evidence for plaintiffs? Obviously. Is it necessary evidence? Of course not. Circumstantial evidence can be more than sufficient.

(2) frozentundra - you said "frivolous." I hate that word because lay people have no idea what it means. Generally, they take it to mean that any case that loses at trial is frivolous. That is not the standard. I can have a perfectly meritorious case that ultimately loses. That doesn't mean I filed a frivolous case.

Litigation typically happens because people can have different interpretations of the same facts/law. We litigate to get an answer to the dispute: who has it right? It's the judge's job to tell us the correct law. It's the jury's job to hear the evidence and decide what the true facts are.

 

[Arachnotronic]

Should Intel be sued over false 14 nm projections and delays?

If Intel had terrible yields and *knew* it but then told investors that yields were great at that very moment, then maybe.

 

[TurtleCrusher]

According to a seasoned US Federal Judge, it is..

Again, all it takes for something to be green-lit for trial is potentially verifiable information of a crime. The judge hasn't decided anything because it hasn't gone to trial yet.

The misinformation from the parrots in this thread is mind-numbing. Heck, even one of you dropped the word "decision."

 

[frozentundra123456]

Ugh... this thread hurts my head.

(1) MiddleoftheRoad - listen to mrmt. He has a bunch better grasp of the law related to this case. Would an outright confession from AMD management be good evidence for plaintiffs? Obviously. Is it necessary evidence? Of course not. Circumstantial evidence can be more than sufficient.

(2) frozentundra - you said "frivolous." I hate that word because lay people have no idea what it means. Generally, they take it to mean that any case that loses at trial is frivolous. That is not the standard. I can have a perfectly meritorious case that ultimately loses. That doesn't mean I filed a frivolous case.

Litigation typically happens because people can have different interpretations of the same facts/law. We litigate to get an answer to the dispute: who has it right? It's the judge's job to tell us the correct law. It's the jury's job to hear the evidence and decide what the true facts are.

According to Wikipedia, a frivolous lawsuit is one that has little chance of being won due to lack of legal merit. I nowhere said or implied that any suit that loses is necessarily frivolous.

I also think you may have a somewhat idealistic view of the legal system. To be blunt, a lot of people who file lawsuits do it simply for the money.

 

[CHADBOGA]

If JF-AMD could get away with his outrageous lies on so many forums, does AMD really have that much to worry about here?

 

[dahorns]

According to Wikipedia, a frivolous lawsuit is one that has little chance of being won due to lack of legal merit. I nowhere said or implied that any suit that loses is necessarily trivial.

I also think you may have a somewhat idealistic view of the legal system. To be blunt, a lot of people who file lawsuits do it simply for the money.

Seriously? Of course people do it for money. The civil system is largely about compensation for harm. And that compensation is achieved through the transfer of money.

But, that doesn't mean that "frivolous" suits are common. Just the opposite. Most plaintiff cases are handled on contingency. Since prosecuting a suit takes an extraordinary amount of time and money to do, it makes no sense to file a suit you have no chance of winning. And frivolous suits are exactly the type of suit no firm has any chance of winning or settling. They'll get kicked the curb by the court very quickly.

Trust me, it's hard enough to win a good case. There is very little reason to waste time on a "frivolous" one. Also, courts can sanction an attorney for filing one.

 

[frozentundra123456]

If JF-AMD could get away with his outrageous lies on so many forums, does AMD really have that much to worry about here?

But was JF-AMD an "official" company spokesperson? If not, he could say pretty much whatever he wanted and AMD would be free of legal responsibility.

That said though, it seems like this will be a difficult case to prove, since it basically comes down to proving intent to deceive rather than just incompetence. That is, unless there is a "smoking gun" type e-mail or something.

 

[Enigmoid]

Hanlon's Razor: "Never attribute to malice that which is adequately explained by stupidity."