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Lawsuit against NVIDIA.

U

unleashed

Limp Gawd
Joined
May 9, 2007
Messages
323
Shalov Stone Bonner & Rocco LLP has filed a securities fraud class action on behalf of all investors who purchased or otherwise acquired the common stock of NVIDIA Corp. (NASDAQ: NVDA) ("NVIDIA" or the "Company"), between November 8, 2007, and July 2, 2008, inclusive (the "Class Period").
The lawsuit is pending in the United States District Court for the Northern District of California and names as defendants NVIDIA and the Company's CEO and CFO during the Class Period.

According to the complaint, the defendants violated the Securities Exchange Act of 1934. Specifically, the complaint alleges that, during the Class Period, the defendants issued a series of misrepresentations and omissions that actively concealed and failed to disclose the unusually high failure rates of NVIDIA's mobile video adapters and the impact of these defects on the Company’s financial condition and results and future business prospects. When the defendants belatedly revealed this information on July 2, 2008, NVIDIA’s stock plummeted, and the Company’s market capitalization was promptly reduced by over $3 billion.

http://www.lawssb.com/news_story.php?news=20080909
 
Not surprising to me. The Dell laptops that my friends and I got in the beginning of our college careers began to fail only two-three years in. We had to turn them in (warranty, for those of us who had them) because they couldn't play games anymore for some reason. Always got blue screens whenever graphics were more strenuous than Railroad Tycoon 2. All of them were Nvidia. Now I have an ATI card and I hope to see it last much longer than two years.
 
It's just creative accounting. It will all work out in the end. Just look at Enron...oh wait...
 
Sounds frivolous. They basically they are saying knowingly withheld information on the high rate of failures of these chips for a period of time, and when they told everyone after a latent period of time, Their market capital dropped by 3 billion dollars. And I think they are saying because they didn't say anything immediately, they are blaming nvidia for the drop in market capital.

Lets play devils advocate here for a second. Nvidia produced these GPUs for several months before anything was mentioned. The first thing I heard about these laptop problems was when nvidia announcing their earnings report for the quarter, that they were going to set aside 196 million dollars for planned warranty repairs in relation to laptop boards having a higher than normal rate of failure. Then I heard that dell was going to extend there warranty on laptops containing this chip by a year and HP by 2. Basically NV here is the first to say there is a problem here, then they say, this is how much we expect its going to cost us (warranty repairs).

They also said I believe, that they had a hard time in a lab environment of recreating the circumstances in which this defect can cause the board to fail, but they said it can fail .

Now this is nvidia, They design GPUs and send the GPU out to a 3rd party to be created, once they have working silicon they then create a reference PCB design (or a 3rd party, not sure on that one) and have a 3rd party mass produce the package. So when they get this product back, they test to see if it works, if it works, its send out to various OEMs and AIB partners to be sold. This defect can only be discovered by the use of the laptop over a set period of time (months probably, not days), so to say nvidia knew about this defect from day 1 and withheld it is pretty insane.

Now what is there idea of unusually high, all GPU designs have the potential to fail, and or be DOA. But nvidia acknowledging the failure potential the rate of failure isn't 0, but then again is never is.

Above what was mentioned, nvidia didn't say anything else on what is causing these failures or which of the companies they contract out to may be responsible, but it is believed that that these failures are caused by excess heat, which is why dell and HP immediately released new bios'es which increased the fan speed for the GPU, perhaps prolonging the failure of said chips. But then again, these GPUs could just be inadequately cooled in the first place, which is why we are only hearing about these two laptop manufacturers doing anything about the failure rate in these chips.

I don't believe nvidia is telling us the full story on this, but I don't know what else they could have done that they haven't already to make the situation right. That's why I think its just inadequate cooling of these chips by dell and HP in there laptop designs. People are going to say, just recall every laptop that has these GPUs in them, but if not every laptop provides the environment for these GPUs to fail, then why create undo panic? which would make the stock situation even worse?

I believe this lawsuit is frivolous, to take advantage of a bad situation. I think this whole situation has been overblown since day one.
 
I think the issue is that by concealing their failure rate they kept their stock price up. People who bought during that time frame were buying at an artificially inflated price due to their active concealment. When the issue finally broke and the stock price dropped, those investors lost a lot of money. The argument can be made that investors were duped into purchasing what they thought was a quality investment.
 
The nvidia cards in the dell 1330's were all junk. My friend is on his 4th replacement.
 
To be honest, as much as I like nvidia, they shouldn't have taken the engineering shortcuts. If they get sued, they really did deserve it.
 
Considering the number of laptops affected by the defects,the situation was sure to have a negative impact on Nvidia's stock once it became public.And it does seem they tried to conceal and downplay it.So there's nothing frivolous about it.
 
they would have to prove ie internal docs or something of that date this was noticed and hid.
 
I would think a company as smart as NV would have started shredding documents and deleting emails long before this lawsuit was ever filed, if they really had anything to hide.
 
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