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Strategies & Market Trends : Can you beat 50% per month? -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (6765)	12/18/2003 10:47:40 AM
From: Smiling Bob	Read Replies (1) \| Respond to of 19257

LF - 27.41 bid - short squeeze again- won't last, ride it down how out of touch I am. Class action filed Details below, some which were what I'd suspected some time ago The complaint charges LeapFrog and certain of its officers and directors with violations of the Securities Exchange Act of 1934. LeapFrog's products include its family of LeapPad products which are hand-held and lap-top electronic platforms that are sold with a variety of content books that utilize game and entertainment technologies to teach reading, writing and math skills. By 2003 LeapFrog was the third largest overall U.S. toy manufacturer, having successfully cornered its niche market of electronic educational toys, behind only industry leaders Hasbro and Mattel. On July 10, 2003, Mattel's Fisher Price launched its own version of LeapPad called "PowerTouch," which mimicked LeapPad and was designed to capture LeapFrog's market monopoly, utilizing Mattel's superior marketing abilities. The complaint alleges that based on the Company's repeated bullish statements, throughout the Class Period Bear Stearns and the Company's other analysts continually reiterated the $0.61 per share earnings guidance and the other guidance provided by LeapFrog. These projections, coupled with the Company's bullish statements, sent the Company's shares soaring to a Class Period high of over $47 per share on October 21, 2003, from $30 per share on July 24, 2003, or a 55% increase. The true facts which were known by each of the defendants, but concealed from the investing public during the Class Period, were that: (a) throughout 3Q'03, retailers were not placing the level of orders defendants expected as part of the typical pre-Christmas inventory build-up; (b) retailers were refusing to allow LeapFrog to ship some of the orders they did place during 3Q'03, instead requiring LeapFrog to bear the risk of holding the product into the Christmas selling season in the 4Q'03 to see if the new products gained customer acceptance and to see how well they competed against Mattel's PowerTouch; (c) defendants were not replenishing LeapFrog's own inventory throughout the Class Period or making expenditures in anticipation of their projected sales; and (d) defendants knew during the Class Period that Mattel's launch of PowerTouch had severely damaged LeapFrog and diminished its market share, causing retailers to reduce planned orders and the Company to file an action seeking injunctive relief against Mattel on October 6, 2003 (one week after the close of LeapFrog's 3Q'03 but more than two weeks before its 3Q'03 results would be released), claiming LeapFrog would be "irreparably injured" unless the court stopped Mattel from selling its PowerTouch. After the close of the market on October 21, 2003, with more than $24 million of insider trading proceeds, defendants released the Company's 3Q'03 financial results which fell materially short of their earlier projections. Knowing investors would punish the stock, trading was halted before the press release was issued. The Company's earnings were $0.55 per share instead of $0.61 per share as analysts had projected based on the Company's sales guidance. On this news, LeapFrog's stock price declined to $31.50 per share, or more than 30% from its Class Period high of $47.