Nvidia faces class action suit for GPU failures

A disgruntled Nvidia shareholder has filed a class action lawsuit against the company in the Northern District of California.

The suit, filed by Lisa Miller, alleges that Nvidia knew about the mass GPU failures as early as last summer but kept things under wraps until July this year when it announced the bad news for both customers and shareholders alike.

"At least as early as November 2007, Nvidia and the other Defendants have known about these unprecedented failure rates, as well as their "root causes." Indeed, Michael Hara, the Company's Vice President for Investor Relations and Communications, conceded during a September 4, 2008, "Citigroup Technology Conference" that Nvidia began troubleshooting these problems with major computer manufacturers beginning in August of 2007," the filing says.

Because of this, the plaintiffs say that anyone who purchased or acquired Nvidia stock between 8th November 2007 and 2nd July 2008 inclusive have been misinformed by the defendants, who allegedly concealed information regarding the mass failure rates.

"Nevertheless, for at least eight months, Defendants concealed from Nvidia investors these defects and their obvious impact on the Company's financial condition and future business prospects," states the filing.

Later in the suit (PDF), the plaintiff claims that Nvidia is lying about the scale of the problem – some believe that the $200 million charge the company incurred to cover the cost of repairing machines affected by the faulty GPUs isn't enough. If the failures don't cause Nvidia to exceed the $200 million charge, there's every chance the lawsuit will – we've asked Nvidia for a comment and will update this story as soon as one arrives.

This could get pretty nasty, and one can understand why the shareholders are angry. What do you make of all of this? Discuss in the forums.

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