Geez, now what? Milberg Weiss Files Class Action Suit Against 3Com Corp. and Its Officers and Directors Alleging Misrepresentations and Insider Trading
SAN DIEGO--(BUSINESS WIRE)--May 11, 1999--Milberg Weiss today announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of 3Com Corp. ("3Com") (Nasdaq:COMS) common stock during the period between Sept. 22, 1998 and March 2, 1999 (the "Class Period").
The complaint charges 3Com and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that beginning in 9/98, defendants made false and misleading statements about 3Com's exceptionally strong and much better-than-expected 1stQ F99 EPS of $.24, strong ongoing demand for 3Com's Systems Products (especially its new flagship CoreBuilder 9000 switch) and 3Com's Client Access Products, 3Com's increased operational efficiencies, improved channel inventory controls and cost savings and the program 3Com was making with its new, improved business model.
The complaint further alleges that during 3Com's 1stQ F99 and 2ndQ F99, 3Com's insiders also used $130.4 million of 3Com's cash to repurchase 4.3 million 3Com shares on the open market, to help manipulate and artificially inflate the stock to help the insiders sell their own shares at much higher and, for them, more profitable prices. As a result of these positive representations, 3Com's stock soared from as low as $23-1/8 on 9/1/98 to as high as $51-1/8 on 12/23/98, its 98 and Class Period high, and during 11/98-1/99, 3Com's top insiders sold 4.2 million shares of their 3Com stock at as high as $48.69 per share for $189 million. In early 2/99, 3Com's stock fell sharply, from $47-1/4 to $30-9/16 in seven trading sessions when rumors circulated that Intel Corp. was gaining NIC market share from 3Com and two 3Com distributors announced disappointing results. However, when 3Com assured analysts that its business model was intact and it was on track to achieve 3rdQ F99 and 4thQ F99 EPS consistent with its prior guidance, 3Com's stock stabilized and recovered to as high as $35-9/16. However, on 3/2/99, 3Com revealed that, due to weak sales of Systems Products, especially in North and South America and very weak sales of Client Access Products, 3Com's 3rdQ F99 EPS, and its results going forward, would be much worse than earlier forecast, causing analysts to slash the 3Com forecast for the 4thQ F99, F99 and F00 EPS to just $.22-$.29, $1.04-$1.11 and $1.15-$1.55, respectively, far below the levels forecast during the Class Period. 3Com's stock dropped from $30-11/16 on 3/1/99 to as low as $22-3/4 on 3/3/99, a 27% two-day decline on extraordinary volume of over 92 million shares.
Plaintiffs seek to recover damages on behalf of all purchasers of 3Com common stock during the Class Period (the "Class"). The plaintiffs 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 30 years. The firm has offices in New York, San Diego, San Francisco, Los Angeles and Boca Raton 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. Visit the firm's Web site at milberg.com.
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 plaintiffs' counsel, William Lerach, Alan Schulman or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wslmwbhl.com.
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CONTACT: Milberg Weiss Bershad Hynes & Lerach LLP
William S. Lerach, 800/449-4900
wslmwbhl.com
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