A class action has been filed in the United States District Court for the Northern District of California on behalf of purchasers of Finisar Corporation (NASDAQ: FNSR) common stock during the period between December 2, 2010 and March 8, 2011 (the “Class Period”). Exchange Act of 1934. Finisar is a provider of optical subsystems and components that connect short-distance local area networks, storage area networks, longer distance metropolitan area networks, fiber-to-the-home networks, cable television networks and wide area networks.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Specifically, defendants failed to disclose that Finisar’s recent revenue growth was due to an oversupply of inventory in the market and that the Company would be unable to sustain its strong growth due to increased pricing pressures and a slowdown in business from China. As a result of defendants’ false statements, Finisar’s stock traded at artificially inflated prices during the Class Period, reaching a high of $43.23 per share on February 14, 2011.
Then, on March 8, 2011, after the market closed, Finisar issued a press release announcing its third quarter fiscal year 2011 results. The Company reported earnings of $18.8 million, or $0.22 diluted earnings per share, and revenue of $263.0 million. The Company further reported its fourth quarter 2011 revenues would be in the range of $235 to $250 million, lower than analysts’ estimates. On this news, Finisar’s stock fell $15.43 per share to close at $24.61 per share on March 9, 2011, a one-day decline of nearly 39%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) Finisar’s recent revenue surge was not due solely to organic growth from real end-market demand, but rather it was partially due to an inventory build by the Company’s customers; (b) Finisar was experiencing increasing pricing pressures due to intense competition in the industry and, as a result, it was forced to concede to steep discounts in order to retain certain of its customers; (c) Finisar was experiencing a serious slowdown in business from China, which would have a detrimental effect on the Company’s ability to continue growing at unprecedented rates; and (d) Finisar failed to disclose known trends and uncertainties as required by SEC regulations concerning its revenue growth rate.
If you are a current shareholder and purchased during the period December 2, 2010 and March 8, 2011, and would like to discuss your options of exercising your rights as a shareholder, please contact us.
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