NVIDIA's problems only started with the $200 million one-time charge

In July 2008, NVIDIA reported one of its first losses in a long time. The main cause for NVIDIA's loss was a one-time charge the firm was forced to take after some of its notebook GPUs were found to be failing at higher than normal rates in some notebook systems.

The one-time charge amounted to about $200 million and was to cover costs associated with repair or replacement of affected notebook computers. NVIDIA hoped that the negative quarter and one-time charge would be as bad as things got for it, but things are really just starting to become interesting.

Two proposed class action lawsuits are pending against the graphics giant over the $200 million charge and the defective GPUs. On September 9, law firm Shalov Stone Bonner & Rocco LLP filed a securities fraud class action on behalf of all investors who purchased or acquired stock in NVIDIA between November 8, 2007 and July 2, 2008.

The core allegation in the suit is that NVIDIA knew as far back as November 2007 that the GPUs were defective and mislead investors by not divulging the issue with the GPUs and the damage the problem could cause the NVIDIA's profitability. The suit was filed in U.S. District Court, Northern District of California on behalf of all NVIDIA stock holders and naming Lisa Miller as the chief plaintiff.

second class action lawsuit was filed against NVIDIA in the Northern District of California on behalf of NVIDIA shareholders who bought or acquired shares of NVIDIA stock during the period of November 8, 2007 to July 2, 2008. The Suit was filed by the Brualdi Law Firm. The Brualdi suit has yet to define a class and is looking for a lead plaintiff for its case. According to the firm, the lead plaintiff will be the applicant for the suit who had the most significant loss in NVIDIA stock.

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