(By Rich Bieglmeier) Could NVIDIA Corporation (NVDA) be on the verge of getting whacked following a lawsuit filed by Advanced Micro Devices, Inc. (AMD) against former employees? Advanced Micro alleges that four employees took more than 150,000 confidential AMD documents with them to NVDA.
One even used an AMD corporate computer to search how to "copy and/or delete large number of documents."
The suit says a review of the documents confirms "they contain highly confidential technical information relating to the latest generation of product and process being developed by AMD, information that would provide an unfair advantage if disclosed to competitors." – somebody is gonna be in trouble.
[Related -NVIDIA Corporation (NVDA) Q3 Earnings Preview: Can We See Another Beat?]
This paragraph in the lawsuit is an eye-catcher, "As a direct and proximate result of [named defendants] wrongful conduct. AMD has suffered and will continue to suffer irreparable harm that cannot be adequately redressed at law. Unless injunctive relief is granted, AMD will be irreparably harmed in a manner not fully compensable by money damages."
What impact do you think an injunction against NVIDIA employees will have on NVDA's stock? We aren't suggesting that NVIDIA did anything wrong, that's up to somebody else to decide. These four folks work for NVDA and the potentially intertwined technology knot will have to untied if the court says so, which could have a negative impact on NVDA shares while everything is sorted out.
[Related -Advanced Micro Devices, Inc. (AMD): Five, Five Dollar Stock Price?]
Of course, in our opinion (we don't want to hear from any lawyers) NVIDIA's management will say the documents and intellectual property were taken without their knowledge and the company has nothing to do with stealing AMD's secrets – hands washed.
NVDA shares are hovering a little more than $1 above their 52-week low of $11.15 and have been in a year-long downtrend. Either Wall Street doesn't care about the suit or doesn't think it will impact NVDA shares. The stock is actually up since word broke, not much, but still green.
iStock, obviously, has no idea when the judge will rule on these matters. NVIDIA Corporation (NVDA) shareholders might be wise to keep an eye on the news' wires. On the off chance NVDA gets tangled up in the mess, its stock price's reaction could be even messier.