CASES
Cisco Systems, Inc.
Class Period: Feb 3, 2010 to Feb 9, 2011
Lead Plaintiff Deadline: May 31, 2011 + Deadline passed
Summary of Case:
A securities class action has been filed against Cisco Systems, Inc. ("Cisco" or the "Company") (CSCO) on behalf of all purchasers of the common stock of Cisco from February 3, 2010, through February 9, 2011. This case has been filed in the USDC - California (Northern).
The complaint alleges that throughout the Class Period, defendants failed to disclose material adverse facts about Cisco Systems, Inc.'s ("Cisco" or the "Company") true financial condition, business and prospects. Specifically, the complaint alleges that: (a) Cisco was facing intense pricing pressure for its products from its more traditional competitors and emerging Chinese competitors; (b) in order to maintain market share and meet its previously announced growth rate targets in the face of the intense pricing pressure being exerted by the Company's competitors, Cisco was forced to dramatically lower prices, which was having a material adverse effect on the Company's margins; and (c) based on the foregoing, defendants lacked a reasonable basis for their positive statements about Cisco's growth rates, market share, orders, new product introductions and gross and operating margins.
On February 9, 2011, the Company issued a press release announcing its financial results for the 2011 fiscal second quarter, ended January 29, 2011, reporting net sales of $10.4 billion, net income on a GAAP basis of $1.5 billion or $0.27 per share, and non-GAAP net income of $2.1 billion or $0.37 per share. Cisco's CEO, John Chambers, commented on the results, stating, in part, "[t]he quarter played out as we expected." Following the 2011 fiscal second quarter earnings announcement, defendants held a conference call with analysts and investors, noting that non-GAAP gross margins were 62.4%, down 1.9% quarter-over-quarter and 3.2% year-over-year. Product related non-GAAP gross margins for the second quarter were 61.1%, down 2.9% from the prior quarter. In response to the unexpected drop in Cisco's margins, shares of the Company's stock fell $3.12 per share, or more than 14%, to close at $18.92 per share, on extremely heavy trading volume.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.