LAW SUIT ALERT!!!...................again............
Class action suit filed against 3Com Corporation and its officers and directors alleging misrepresentations and insider trading
Business Wire - March 24, 1997 14:22
FINANCIAL CLASS-ACTION 3COM FN CALIFORNIA COMED COMPUTERS ELECTRONICS V%BW P%BW
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SAN DIEGO--(BUSINESS WIRE)--March 24, 1997--A class action has been commenced in the California Superior Court for Santa Clara County on behalf of purchasers of 3Com Corporation ("3Com") common stock during the period September 24, 1996 to February 10, 1997.
The complaint charges 3Com and certain of its officers and directors with violations of the California Corporations, Civil and Business & Professions Codes. The complaint alleges that during the Class Period, 3Com reported revenue and earnings per share ("EPS") growth for its 1stQ and 2ndQ of Fiscal 1997 ("F97") in excess of prevailing analysts' estimates, attributing these spectacular results to extraordinarily strong demand for 3Com's Fast Ethernet Adapter Cards, stackable hubs and switches, as well as the relative price stability for those products. 3Com also raised its gross margin operating model to 53%-55% due to this purportedly strong demand and price stability, forecasting its operations would be at the high end of its targeted gross margin range for several quarters and that its 3rdQ and 4thQ F97 revenues and EPS would increase sequentially and reach higher levels than earlier forecast. As a result, 3Com's stock was a spectacular performer, skyrocketing from about $52 per share just before the beginning of the Class Period to a Class Period high of $81-3/8 per share in mid-Dec. 1996 DD, a 52% increase in just 2-1/2 months. As 3Com's stock skyrocketed to its all-time high level, the ten 3Com insiders named as defendants sold off 896,000 shares of their 3Com stock at as high as $78-1/8 per share, pocketing $59.3 million in illegal insider trading proceeds, while 3Com itself issued (sold) 3.9 million of its shares at $66 per share to acquire OnStream Networks, and defendants attempted, albeit unsuccessfully, to close their ongoing negotiations to have 3Com acquire U.S. Robotics for over $7 billion in 3Com stock. In early Feb. 1997, 3Com's stock began to collapse as rumors circulated that there was severe price-cutting in 3Com's Fast Ethernet Adapter Card market and that 3Com's business was performing much more poorly than had been publicly disclosed. Then, on Feb. 10, 1997, 3Com admitted that its 3rdQ F97 revenues would decline from 2ndQ levels and its EPS would be much worse than earlier forecast, due to severe price-cutting for its Fast Ethernet Adapter Cards and weak demand for Adapter Cards, stackable hubs and switches and that 3Com could not forecast when its business would recover. Upon these revelations, 3Com's stock collapsed to $37 per share on 36 million shares trading volume, the biggest one-day decline on the largest one-day stock volume in 3Com's history as a public company.
Plaintiffs seek to recover damages on behalf of all purchasers of 3Com common stock during the Class Period (the "Class"). They are represented by several law firms, including Milberg Weiss Bershad Hynes & Lerach LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 20 years. The firm has offices in New York, San Diego, San Francisco and Los Angeles and is active in major litigations pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous important actions on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion. For additional information about Milberg Weiss, see the firm's website at milberg.com . If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffs' counsel, William Lerach of Milberg Weiss at 800/348-6192.
CONTACT: Milberg Weiss
William Lerach, 800/348-6192
REPEATS: New York 212-752-9600 or 800-221-2462; Boston 617-236-4266 or
800-225-2030; SF 415-986-4422 or 800-227-0845; LA 310-820-9473
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