Shareholders File Class-Action Lawsuit Against Nvidia

Paul Lilly

It looks as though 8M-series notebook owners aren't the only ones feeling slighted by Nvidia, who in the past several month has taken a PR hit due to an "abnormal failure rate" in what the company still claims is a limited batch of notebook GPUs. Media reports have questioned exactly how limited the problem remains, and there's even speculation that the faulty parts may apply to both the newer 9M-series of GPUs and desktop parts as well.

Now Nvidia must fight a new battle, this one in court. The graphics company has been hit with a securities fraud class action lawsuit, which covers all investors who purchased or otherwise acquired common stock of Nvidia between November 8, 2007, and July 2, 2008.

The complaint alleges Nvidia violated the Securities Exchange Act of 1934, accusing the company of making a series of misrepresentations and omissions that actively concealed and failed to disclose the unusually high failure rates of its mobile GPUs, along with the impact the supposed defects would have on Nvidia's financial condition. Nvidia in July announced it would take a one-time hit of $150 to $200 million to cover warranty and repair costs associated with the failures, and the company's stock tumbled downwards in after-hours trading following the announcement.

Does the lawsuit have merit?

Image Credit: Flicrk speric

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