Advanced Micro Devices must face securities fraud lawsuit: ruling




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U.S. chipmaker Advanced Micro Devices must face claims it committed securities by hiding problems with the 2011 launch of a new computer processor eventually led a $100 million writedown, a federal judge in Oakland, California, ruled.

In an order on Tuesday, U.S. District Judge Yvonne Gonzales Rogers said plaintiffs have supported their claims Advanced Micro misled them by stating in the spring of 2011 that problems with the new processor were in the past.

Plaintiffs’ lawyer Jonathan Gardner said he was pleased with the decision. Lawyers for Advanced Micro could immediately be reached for comment.

The lawsuit filed last year accused Advanced Micro of artificially inflating the ’s share by making false statements about the so-called Llano, which it had touted as “the most impressive processor in history.”

Originally set for product launch in the fourth quarter of 2010, sales of the Llano were delayed because of problems at the ’s chip manufacturing plant, the lawsuit said.

The lawsuit said Advance Micro’s then-Chief Financial Officer Thomas Seifert told analysts on an April 2011 conference call that problems with chip production for the Llano were in the past, and that the would have ample product for a launch in the quarter.
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Advanced Micro continued state that there were no problems with supply, concealing the that it was only shipping Llanos -tier computer manufacturers because of supply constraints, the lawsuit said.

By the Advanced Micro was ready ramp up shipments in late 2011, demand had dwindled, leading an inventory glut, the lawsuit said. Advanced Micro eventually disclosed in October 2012 that it was writing down $100 million of Llano inventory as salable, the lawsuit said.

Advanced Micro’s shares fell nearly 74 percent a peak of $8.35 in March 2012 to a low of $2.18 in October 2012 when the market learned the extent of the problems with the Llano launch, the lawsuit said.

The lawsuit seeks damages on behalf of the Arkansas Teacher Retirement System, Belgium-based KBC Group’s KBC Asset Management and other investors who bought the company’s shares between April 2011 and October 2012.

The case is: Babak Hatamian et al Advanced Micro Devices Inc et al, U.S. District Court, Northern District of California, No 14-226.(Reuters)