Intel Directors Sued by Shareholders Over $271 Bln Market Drop
2001-11-06 17:03 (New York)
Intel Directors Sued by Shareholders Over $271 Bln Market Drop
Wilmington, Delaware, Nov. 6 (Bloomberg) -- Directors of
Intel Corp. were accused in a lawsuit of approving false financial
statements to raise the company's stock price so insiders could
sell more than $23.5 million in shares.
Shares of Intel, the top computer-chip maker, rose to a high
of about $75 on Aug. 28 last year and fell to a low of about $35
on Oct. 11, 2000, wiping out $271 billion in market
capitalization, according to a suit filed Monday in Delaware
Chancery Court.
In the lawsuit, Intel share owners Howard Lasker and Aaron
Brody say company directors knew that Intel reports between July
and September 2000 about new products and revenue projections were
overly optimistic.
``The statements were designed to, and did artificially
inflate the price of Intel shares long enough to allow certain of
the company's insiders to sell more than 340,000 of their
privately held Intel shares for a value of more than $23.5 million
while in possession of material adverse, non-public information,''
the suit says.
What investors didn't know, according to the suit, was that
``the company was encountering very weak and, in fact, shrinking
demand for its products in Europe'' and was having production
problems with its Pentium microprocessors.
Shares of Santa Clara, California-based Intel, which reported
$33.7 billion in fiscal 2000 sales, rose $1.29 to $28.25 today.
The shares fell to a 52-week low of $18.96 on Sept. 21.
The suit asks a judge to award damages to the company from
directors, and to award legal fees and expenses. A similar lawsuit
filed last month in federal court in San Francisco seeks damages
for all shareholders.
Intel officials weren't immediately available to comment on
the Delaware suit.
--Phil Milford in Wilmington, Delaware (302) 984-3373, or
pmilford@Bloomberg.net, through the Washington newsroom (202) 624-
1917 /ta
Story illustration: To graph Intel's sales and earnings per share,
see: {INTC US <Equity> DES5 <GO>}.
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