Company Press Release
Class Action Suit Filed Against PowerCerv Corporation and
its Officers, Directors, Venture Capital Investors and
Secutities Underwriters Alleging Misrepresentations
SAN DIEGO--(BUSINESS WIRE)--July 25, 1997--A class action has been
commenced in the United States District Court for the Middle District
of Florida on behalf of purchasers of PowerCerv Corporation
(``PowerCerv'') common stock during the period March 1, 1996 to
July 24, 1996.
The complaint charges PowerCerv, certain of its officers and
directors, the co-lead underwriters of its March 1, 1996 initial
public offering and certain venture capital investors with
violations of the federal securities laws.
The complaint alleges that defendants disseminated false and
misleading statements about PowerCerv's products and business
prospects, which statements were made for the purpose of inflating
the price of PowerCerv's stock sold on the Offering and thereafter
so that certain Individual Defendants and the Venture Capital
Defendants could recoup funds they had invested in and loaned to
PowerCerv and to provide PowerCerv with sufficient working capital
to survive as an ongoing business.
Shortly after the Offering, Alex. Brown & Sons, Inc. and Robertson,
Stephens & Co., the underwriters of the Offering, issued ``booster
shots'' designed to further inflate PowerCerv's stock price by
making additional false and misleading statements concerning the
Company's business and prospects.
However, contrary to the positive representations about its products
and ongoing growth and success, PowerCerv's products were not being
well received in the market. The complaint alleges that defendants
knew at the time of the Offering but did not disclose that
PowerCerv's newest products needed further enhancements and
additional features.
Shortly after the Offering -- at least as early as April 1996 --
defendants were forced to pull 25 senior applications consultants
out of the field to help re-design and to develop new features for
the Company's applications software and to attempt to integrate the
various applications programs.
Thus, contrary to defendants' statements about the strength of
PowerCerv's business and prospects, the Company's business was
in fact weakening and it was struggling to achieve sales of its
newest products.
Finally, PowerCerv revealed in a press release issued on
July 24, 1996 that it had incurred an operating loss in the
June 30, 1996 quarter, that license revenue growth was not as
expected ``due to delays in prospect purchase decisions,'' and
that consulting service revenues were impacted by the temporary
reassignment of some 25 consultants to assist in research and
development to expedite new releases of the Company's applications
products.
As a result of these revelations, the underwriters of PowerCerv's
initial public offering effectively abandoned sponsorship of the
Company's stock, lowering their recommendations from ``buy'' to
``neutral'' or ``long-term accumulate,'' and PowerCerv's stock
price, which had been as high as $19-1/2 per share as recently as
May 21, 1996, plunged to as low as $3-1/8 on July 25, 1996, before
closing at $4 per share, on huge volume of 1,841,000 shares traded.
Plaintiff seeks to recover damages on behalf of all purchasers of
PowerCerv common stock during the Class Period (the ``Class'').
He is represented by Milberg Weiss Bershad Hynes & Lerach LLP
and James, Hoyer & Newcomer, P.A., who have expertise in prosecuting
investor class actions.
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 litigation 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.
If you are a member of the Class described above, you may, no later
than 60 days from today, move the Court to serve as lead plaintiff
of the Class, if you so choose. In order to serve as lead plaintiff,
however, you must meet certain legal requirements.
If you wish to discuss this action or have any questions concerning
this notice or your rights or interests, please contact plaintiff's
counsel, William Lerach or Blake Harper of Milberg Weiss at
800/348-6192 or via e-mail at wsl@mwbhl.com . |
