NVIDIA Shareholder Suit over Defective GPUs

[Woofmeister]

This is interesting. NVIDIA has been named in two shareholder class actions for losses shareholders suffered from NVIDIA's belated announcement that their notebook GPUs were failing at alarming rates. The announcement of a one-time charge of $200 million to cover costs associated with repair and replacement of the defective GPUs led to a drop in the stock price.

Since NVIDIA knew it was having problems with their notebook GPUs as early as November 2007, I'm pretty sympathetic to NVIDIA's shareholders on this one.

 

[ViRGE]

NVIDIA has been threatened with a lot of suits over the years, few of which have ever stuck. I'm not sure if this one will be any different.

 

[ronnn]

Jensen has certainly been popping off in a strange manner the last few months. Wouldn't be too surprised myself if he is forced to step back because of this. Happened to an ati guy a few years back, if I remember properly.

 

[Keysplayr]

Or, it could be just blown out of proportion.

 

[ronnn]

Depends I guess on if your proportion is a defective chip or a chunk of stock decreasing in value.

 

[Keysplayr]

It isn't my proportion. And I don't own any stock in any company. I can't play that game. I was the guy who bought Enron stock. LOL.

 

[bryanW1995]

I lived in nw houston when enron went down. I remember hearing about 65 year old retired "millionaires" literally going to work for mcdonalds and/or sweeping floors at the school... huang is a different animal from those enron guys, however. The man is worth $500 million + even with today's crappy stock price but he just keeps slugging away. He wants to slay the dragon and take its place. He doesn't need any more money, he just wants greater and greater success. I might not always buy nvidia graphics cards but there is nobody like huang in the entire graphics industry and very few like him in the entire high tech industry. nvidia is lucky to have him.

 

[apoppin]

Originally posted by: bryanW1995
I lived in nw houston when enron went down. I remember hearing about 65 year old retired "millionaires" literally going to work for mcdonalds and/or sweeping floors at the school... huang is a different animal from those enron guys, however. The man is worth $500 million + even with today's crappy stock price but he just keeps slugging away. He wants to slay the dragon and take its place. He doesn't need any more money, he just wants greater and greater success. I might not always buy nvidia graphics cards but there is nobody like huang in the entire graphics industry and very few like him in the entire high tech industry. nvidia is lucky to have him.

are you kidding?

Jensen IS nVidia .. they all share the same vision

.. Nvidia: inside

*everything* that can use a GPU

 

[ronnn]

Quite sure nvidia will survive nicely long after jensen is gone.

 

[shangshang]

Jensen will not leave NV anytime soon. Think about this, who is NV going to replace him with? While a $200 million charge is not pocket change, but this is not something that would force a company of NV's size and position to just casually dump a man like Jensen.

 

[apoppin]

Originally posted by: ronnn
Quite sure nvidia will survive nicely long after jensen is gone.

clearly he has molded Nvidia into his own image and will no doubt be instrumental in picking his own successor

Jensen is co-founder of Nvidia, ya know
- being mostly president or CEO since '93

not bad for a former microprocessor designer at Advanced Micro Devices

 

[Woofmeister]

Originally posted by: keysplayr2003
Or, it could be just blown out of proportion.

With all due respect, I think it's hard to blow a $200 million charge out of proportion. NVIDIA's levered free cash flow is only $233 million.

 

[Keysplayr]

Originally posted by: Woofmeister

Originally posted by: keysplayr2003
Or, it could be just blown out of proportion.

With all due respect, I think it's hard to blow a $200 million charge out of proportion. NVIDIA's levered free cash flow is only $233 million.

Think of that 200 million dollar charge as a line of credit (like a homeowner would apply for against the equity of his house). Just because there is a charge, doesn't mean it all gets used. It is just ready to go if needed. And it doesn't look like it will be needed. HP, Dell have not recalled a single laptop. I think they just may be handling any actual failed, or overheating chips via their warranty service. Like I mentioned, this issue was hyperinflated via website such as the inquirer with Charlie Demerjian constantly spreading anti-nvidia props.

 

[Nemesis 1]

Or keys you could look at it like this . Beings we now have more info . That the 200 million charge is just the first installment . Of a seies of charges that will occur because of the poor choice in materials used on the chips. Tring todo damage control on something like this could hurt viewer. Who doesn't fully understand or someone who doesn't want to except the facts. Its an ugly miss all around. Better just to set back and watch the show unfold . Its out of NV hands now. There are more lawsuites coming.

 

[Keysplayr]

Originally posted by: Nemesis 1
Or keys you could look at it like this . Beings we now have more info . That the 200 million charge is just the first installment . Of a seies of charges that will occur because of the poor choice in materials used on the chips. Tring todo damage control on something like this could hurt viewer. Who doesn't fully understand or someone who doesn't want to except the facts. Its an ugly miss all around. Better just to set back and watch the show unfold . Its out of NV hands now. There are more lawsuites coming.

I know what the 200mil charge is. But what are you basing your information here on?
What "more info" do we have? Where on the internet has it been said that 200 mil was just the first installment but from your own fingers? It's not damage control. It is what I am reading. And I'm reading all I can about it.

Things like this: Link

 

[Nemesis 1]

The 200 million was charged for the note books. But the problem extends beyond that. The proof will come in the form of more class action lawsuites. Of differant flavors. Like putting out bad products. Thats a good link . But lets wait for this qts. results shall we.

 

[rjc]

Originally posted by: keysplayr2003
It is what I am reading. And I'm reading all I can about it.

If you want a sample notebook, the Dell XPS 1330 is a good example, try this from the notebookreview.com forums:
M1330 Display Issue
...thread is like 92 pages of pain and suffering

Also noticed, it not a recall, but dell has cancelled the 1330's older brother the 1530 which seemed to also be having problems with its 8600gt overheating.

The problem is for any notebook manufacturer if they decided to recall is that they would either have to pay cash or replace the motherboard with a similar product that worked....there appears to be nothing obvious apart from maybe an intel igp solution which would have much lesser performance.

I read the shareholder claim from the OP at nvdaclassaction.com. The strongest evidence they seem to have is the hp notice from last november plus the nvidia exec saying that nvidia had been working with partners on the problem since last year. Apparently according to SEC rules when discovering a problem they are supposed to notify the market within 4 days.

FWIW i think they will need some more evidence, either some testimony from a laptop manfacturer or some kind of discovery to be allowed to dig up nvidias internal docs and email etc. Need to show concretely nvidia deliberately hid they problem which they havent done yet.

All this doesnt help the people with dead notebooks at all. They have to take their cases individually to the different notebook manufacturers, cannot combine into a larger class to take the case against nvidia directly.

 

[apoppin]

Originally posted by: Nemesis 1
The 200 million was charged for the note books. But the problem extends beyond that. The proof will come in the form of more class action lawsuites. Of differant flavors. Like putting out bad products. Thats a good link . But lets wait for this qts. results shall we.

You don't that the problem extends beyond notebooks. Nor that there will be a single *successful* class action lawsuit

You mean that is what some of you hope, as some of you appear to despise Nvidia and some of you also appear to wish bad to happen to them; much like Charlie who takes delight in reporting - or starting - any negative news about Nvidia

You have no real knowledge of this situation beyond what any of us have - even Charlie just guesses at it, putting as much negative spin on it as possible.

Yes, time will tell ..

 

[rjc]

Maybe the accusations against nvidia are too close to home for people to see objectively what is going on. So how about a link to another billion dollar GPU failure?
Xbox 360 Defects
"many of the problems could be blamed on the ATI graphics chip, which could overheat so much it warped the motherboard. This put stress on bad solder joints, causing them to fail early in the machine?s life."

Hmmm kindof sounds familiar.

The article is quite long, sorry, but hopefully it explains how "latent" defects work. Also note how the users often weren't always outraged, in fact almost the opposite in some cases, something for behavioural scientists to study i guess.

 

[BladeVenom]

Why hasn't MS been sued for the 360 fiasco?

 

[ronnn]

They quickly admitted the problem and extended warranties. They were upfront with shareholders. They have still absorbed a loss - as perception is xboxes are shoddy.

Here the allegation is Nvidia hid the problem from shareholders and customers. while making wild statements about whoopass and rising profits.

 

[shangshang]

This minor setback is nothing to NV. You don't worry about something that you have solution to. Money charge is always a bad thing, no one likes a charge, but the important thing is there is a solution that will not break the compnay. Sure the shareholders will piss and moan in the meantime; name me one shareholder of any tech compnay who hasn't pissed and moan at one point.

NV's biggest strategic concern right now not the charge, not even ATI, but Intel. If there's one company that has the technical expertise and R&D money to threaten NV, then it's Intel. NV management is not going to spend time dwelling over a potential $200 mil charge like some chicken littles when Intel is the looming dark cloud that could turn into a category 4 if NV doesn't react and just dwell over a freakin charge.

 

[rjc]

Originally posted by: BladeVenom
Why hasn't MS been sued for the 360 fiasco?

There were some customer class actions started i think - one for the power brick overheating and maybe other hardware failures and another cause the 360 was chewing discs.

The first sort of faded when microsoft extended warranties and started offering free exchanges for faulty xboxes(ie the $1B charge) and i think $25 or something for each disc the xbox chewed.

That and they actually stretched the time enough that they could develop a new version of the xbox hardware that was a bit more reliable to send out to replace the broken ones.

Dont think there were any shareholder suits - need to prove an exec lied somewhere or some kind of coverup by management that directly caused shareholder loss. Is apparently usually quite hard to do.

In the nvidia case both HP & Dell have extended warranties. Also providing downclocking nvidia drivers and fan at 100% bios updates. Big problem they have at the moment is that they have no choice but to replace with identical hardware which often fails in short order requiring repeated replacements. Unlike xbox redesigning all the various laptops effected is just too expensive.

Not sure what Lenevo, Toshiba, Sony, Acer, Asus and Apple are doing, have noticed quite a few complaints about the MacBook Pro for instance.

The above and the other oems i forgot are the only direct customers of nvidia, and thus able to sue them as customers i think.

 

[nRollo]

Originally posted by: ViRGE
NVIDIA has been threatened with a lot of suits over the years, few of which have ever stuck. I'm not sure if this one will be any different.

QFT

I think it was two years ago they were suing ATi for defrauding the shareholders because they "should have known the 2900XT would not sell well" or some crap like that.

Don't know if it happened, but it wouldn't surprise me if AMD was sued because they "should have known about errata error".

Moral of the story is lawyers like to sue corps and try to "earn" a living.

 

[BladeVenom]

Originally posted by: ronnn
They quickly admitted the problem and extended warranties. They were upfront with shareholders. They have still absorbed a loss - as perception is xboxes are shoddy.

Here the allegation is Nvidia hid the problem from shareholders and customers. while making wild statements about whoopass and rising profits.

Microsoft lied about the problem for as long as they could. They kept saying at the beginning that the failure rate was within industry standards. They have never been honest about how many failures they had or the exact cause. They only reluctantly extended the warranty after massive bad press about how bad 360 failure rate was.