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AMD sued by investors as Llano APU made a whimper not a bang

by Mark Tyson on 20 January 2014, 10:04

Tags: AMD (NYSE:AMD)

Quick Link: HEXUS.net/qab7sb

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A class action lawsuit has been filed in California by (ex)investors in chipmaker AMD. The complaint is that AMD violated the US Securities Exchange Act of 1934 by overestimating demand for its Llano APUs and also later dismissed the potential impact of unsold inventories.

The lawsuit is on behalf of investors who owned AMD stock between 27 October 2011 and 18 October 2012. Robbins Geller Rudman & Dowd LLP, acting for the stockholders, says that AMD made "false and misleading" statements about the demand for Llano APUs, their popularity and industry trends.

The complete nature of the class action suit is explained in the PDF available here. However the key complaint, covering the Llano era, is as follows:

"...defendants repeatedly highlighted the “strong” and “significant” interest in, demand for, and unit shipments of, its Llano APUs. Defendants falsely and misleadingly represented that AMD’s desktop business was in a “strong position” and that it would “continue to rebound” in 2012. As late as April 19, 2012, defendants stated that the demand for the Llano APU was “higher than anticipated,” particularly in the “emerging markets” and that there were no “significant issues” in the important desktop market."

Furthermore the complainants say that in 2012 AMD "knew or recklessly ignored," a misalignment between Llano motherboards sold and its projected chip sales. In July 2012 AMD reported lower than expected revenue for Q2 but said the large amount of unsold Llano chips wouldn't impact its future gross margins. AMD stock went down by 25 per cent. The complainants say that "Just weeks later," AMD announced its Q3 2012 gross margins were down over 31 per cent – in the main due to a $100 million inventory write down of Llano chips. This news precipitated a further 17 per cent drop in AMD share price.

It will be interesting to see how this court case will go, if the jury will decide for or against AMD. Do readers think AMD wilfully mislead investors/the public or was just overly optimistic about its new APUs in the face of the PC market downturn at that time?



HEXUS Forums :: 38 Comments

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you would think that investors would know that no-one give a **** about apus, I really dont get the market for it and drive towards them. This “media” centre nonsense is so 2005 and even those noone made pc just for that. Now just take any mobile device and plug it into big screen= same
Those Apu`s cant play game anyway, sure they can run them, but thats different
Do readers think AMD wilfully mislead investors/the public or was just overly optimistic about its new APUs in the face of the PC market downturn at that time?
I'd say it was definitely a case of the latter - and let's be honest, AMD aren't the only tech company to get burnt by the downturn in the PC market.

As to this case - if there's anything to it then shouldn't the SEC be investigating with a view to a federal prosecution. Otherwise this looks like sour grapes by a load of greedy b's who figured on making a killing and then got a rude reminder that the stocks can go down as well as up.
Smikis
you would think that investors would know that no-one give a **** about apus, I really dont get the market for it and drive towards them. This “media” centre nonsense is so 2005 and even those noone made pc just for that. Now just take any mobile device and plug it into big screen= same
Those Apu`s cant play game anyway, sure they can run them, but thats different
Sorry that's just wrong.

1. APU's are a great solution for system builders who need to target the lower end of the price bracket. So you get your cpu and gpu in a single SKU, while still offering the opportunity for a discrete graphics card if you need it later. Where I have a difference of opinion with AMD is that they seem to want to focus on APU's only, so no fancy new AMD processor to replace the FX's;

2. Media centre's “nonsense”? I think there's a LOT of folks on Hexus that have built MC's or HTPC's so that statement doesn't hold water. Heck, talking to a colleague last week and he's just built a second MC for his kids;

3. APU's can't play games? Hexus beg to differ AMD A8-7600, Benchmarks: Gaming "The graphically-heavy BioShock Infinite is run at medium-quality settings. Smooth at 720p but becoming a little choppy at the full-HD resolution“ and ”GRID 2 looks rather nice at high-quality settings, used in the benchmark above. … What's more important is the knowledge that the game is nice and playable at 1080p.". Sure, I wouldn't like to throw BF4 at it (although maybe Mantle might make a difference?), and this is definitely a no-Crysis zone;

4. Mobile device+tv = APU for gaming? Arguable. After all, there's some mobile games that are pretty spectacular, (Deadtrigger2 etc). On the other hand the APU has access to the massive armada of Windows (and Linux?) games.

The gaming issue I really think it depends on what you're running. From what I've seen the midrange APU's are slightly better than the typical gaming tablet, while still able to access that wealth of titles. And of course, you can always shoot off to the shop and put in a low or mid-range graphics card (R9 270, 280?) and get something pretty decent.

Like you, I'd prefer a discrete processor and graphics card, but there's an A6 powered desktop in the house and that seems to do pretty well on the price/performance stakes. So I'm willing to admit that there's definitely a niche for APU's. Especially as more and more folks seem to buy these AIO PC's - in which case there's usually not the space/budget for a discrete graphics card. In that usage, what's the alternatives if you need to run Windows? As far as I can tell it's Intel's IGP, which seem to be better on the compute, but the AMD APU pull back a big lead in the graphics side.
Smikis
Those Apu`s cant play game anyway, sure they can run them, but thats different

Funny, my review of the A6-3670k would beg to differ. Skyrim's very playable at 1080p low details on an A6-3670k - 24fps may not sound much, but in a third person RPG it's enough. Torchlight screams along at around 60fps with max IQ, and Torchlight is a hugely popular game. Dungeon Siege 3 runs nicely on it too, as does XCOM. Not everyone needs 60+fps with all the eye candy turned up to enjoy a game, you know… :rolleyes: That machine was built specifically for media duties and occasional gaming, and an APU fits the bill perfectly - even a 3 generation old Llano APU (you know, the one the investors are actually complaining about). I'd love to see you play XCOM on a smartphone, I really would….
APUs are not for the type of PC gamer who wants something special, but they are good for getting new gamers onto the PC platform on a budget.