05/19 18:27 Barrack Rodos Files Suit Against 3Com Corp. and Its Officers and Directors Alleging Misrepresentations and Insider Trading
PHILADELPHIA, May 19 /PRNewswire/ -- Counsel for Class Plaintiff, Barrack, Rodos & Bacine, today issued the following:
A class action has been commenced in the United States District Court for the Northern District of California on behalf of all persons who purchased the common stock of 3Com Corp. (Nasdaq: COMS) ("3Com" or the "Company") between September 22, 1998 and March 2, 1999, inclusive (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 September 1998, 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 costs savings and the progress 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 September 1, 1998 to as high as $51-1/8 on December 23, 1998, its 1998 and Class Period high, and during November 1998-January 1999, 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 February 1999, 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 March 2, 1999, 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 March 1, 1999 to as low as $22-3/4 on March 3, 1999, a 27% two-day decline on extraordinary volume of over 92 million shares. The plaintiff seeks to recover damages on behalf of all purchasers of 3Com common stock during the Class Period. He is represented by the law firm of Barrack, Rodos & Bacine, which has extensive experience in prosecuting investor class actions involving financial fraud. Barrack, Rodos & Bacine has prosecuted securities, antitrust and consumer class actions for over 20 years. The firm has offices in Philadelphia, San Diego, New York, Boston and New Jersey and has been designated lead counsel by federal and state courts across the country in large, complex cases. For more information about Barrack, Rodos & Bacine, please visit their website at www.barrack.com.
If you are a member of the Class described above, you may, no later than July 10, 1999, 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 case or your rights or interests, please immediately contact:
Maxine S. Goldman
Shareholder Relations Manager
Barrack, Rodos & Bacine, Counsel for Class Plaintiff
3300 Two Commerce Square
2001 Market Street
Philadelphia, PA 19103
800-417-7305 or 215-963-0600
fax number 888-417-7306 or 215-963-0838
e-mail at msgoldman@barrack.com SOURCE Barrack, Rodos & Bacine
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