16 May 2011

Finisar sued over alleged violations of Federal Securities Laws

The Shareholders Foundation of San Diego, CA, USA says that an investigation for current long-term investors in Finisar Corp over possible breaches of fiduciary duties has been initiated.

An investor filed a lawsuit against Finisar over alleged violations of Federal Securities Laws on behalf of purchasers of its common stock during the period 2 December 2010 and 8 March. Meanwhile, an investigation has been announced on behalf of current long-term investors, in particular those who purchased shares prior to December and continue to hold those shares.

The investigation on behalf of current long-term investors concerns whether certain current and/or former officers and members of Finisar’s board of directors and executive officers can be held liable in connection with the alleged Securities Laws violations in the lawsuit by investors who purchased stock between 2 December 2010 and 8 March 2011. According to the complaint filed in in the US District Court for the Northern District of California, the plaintiff alleges that Finisar violated the Securities Exchange Act of 1934 by issuing between 2 December 2010 and 8 March 2011 materially false and misleading statements regarding its business and financial results.

Finisar’s total 12-month revenue grew from $418.55m to $629.88m from end-April 2007 to end-April 2010. The firm was able to go from a net loss of $48.91m reported on 30 April 2007 to net income of $14.13m reported on 30 April 2010. Shares traded during October 2010 at under $20 per share

On 1 December 2010 Finisar, announced record quarterly revenues and profitability for its second quarter (ended 31 October 2010). Shares rose to almost $30 per share. Then, on 20 December, Finisar announced a public offering of common stock. Shares continued to increase to $43.22 on 4 March 2011.

Then, on 8 March (after the close of trading, Finisar announced its financial results for its third quarter (ended 30 January 2011), reporting revenue exceeding an annual run-rate of $1bn. However, Finisar also disclosed that it expected adjusted earnings of $0.31–0.35 per share for the three months ending 30 April 2011. According to analysts, on average they had been looking for profits of about $0.44 cents per share.

Finisar’s revenue forecast for the fourth quarter of $235–250m fell short of Wall Street expectations for $258.6m, hence the investigation.

In its announcement of 8 March, Finisar identified a slowdown in its business in China, a 10-day shutdown for Chinese New Year, and adjustments of inventory levels by some of its telecoms customers as reasons for the shortfall.

Shares of Finisar fell from $40.04 on 8 March to $25 on 9 March and continued to decline to $22.58 on 15 March. Recently, however, shares have traded at above $25.

The Shareholders Foundation says that those who purchased Finisar shares prior to December 2010 (and presently continue to hold those shares) have certain options and should contact it at mail@shareholdersfoundation.com or call +1 (858) 779 - 1554.

Tags: Finisar

Visit: www.ShareholdersFoundation.com