Please ensure Javascript is enabled for purposes of website accessibility

AMD Puts the Bulldozer Debacle Behind It With a $12.1 Million Settlement

By Timothy Green – Aug 28, 2019 at 4:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The disastrous product is now entirely in the rearview mirror.

Advanced Micro Devices (AMD -2.22%) is riding high after the successful launch of its third-generation Ryzen CPUs, but it wasn't long ago that the company's products were seriously inferior to chips from rival Intel. AMD's ads for some of those inferior products spawned a lawsuit alleging false advertising.

Before Ryzen, AMD's PC processors were based on the Bulldozer architecture, which debuted in 2011. The company advertised some of those chips as having eight cores, but the unique design of Bulldozer meant that pairs of cores shared certain resources. This design turned out to be a disaster for AMD, giving Intel chips an insurmountable advantage in single-threaded performance and leading to severe market-share losses.

The AMD logo on a chip.

Image source: AMD.

As reported by The Register, a tech news website, AMD has now agreed to settle this false-advertising lawsuit for $12.1 million. If 20% of purchasers make a claim, that amounts to about $35 per chip.

The financial impact of this settlement is small -- AMD's adjusted profits will be measured in the hundreds of millions of dollars this year. But it puts to bed a very difficult period for the perennially second-place chip company. The Bulldozer architecture was a risky bet, and not only did it not pay off, but it also made the company a nonfactor in the CPU market for many years.

AMD's newer Ryzen CPUs, and its EPYC server CPUs, have turned the tables, leading to market-share gains and solid profitability. With the lawsuit settled, Bulldozer can finally be left in the past.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of Intel and has the following options: short September 2019 $50 calls on Intel. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$67.96 (-2.22%) $-1.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.