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AMD hit with class action

Suit alleges chip maker over-inflated K6 sales projections

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AMD is the recipient of a new class-action complaint, filed yesterday in the District Court for Northern California. AMD and its CEO, Jerry Sanders, are charged with security law violations following projections for K6 demand that excited financial analysts, and resulted in AMD shares rising from $17 on 22 October 1998 to $32 shortly afterwards. But on 13 January, when AMD disclosed that there were design and production problems, the shares dropped to $22.50, declining around 20 per cent overnight. The basis of the claim by lawyers from Lionel Z Glancey in Los Angeles is that AMD projected an increased demand for the K6, and an increase in AMD's market share relative to Intel. Also yesterday, David Farber for CNBC-TV had some harsh things to say about financial analysts, who are increasingly seen as supporting their firms' lucrative investment banking business. Farber noted that many people thought that analysts' advice was of "shoddy quality". So why don't the class action pirates go after the real transgressors: the financial analysts? And why should hi-tech investments be risk free? ®

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