NEW YORK -April 15, 2005- LAWFUEL – The Law News Network -Lasky & Rifkind, Ltd., a law firm with offices in New York and Chicago, announces that a lawsuit has been filed in the United States District Court for the Northern District of California, on behalf of persons who purchased or otherwise acquired publicly traded securities of Blue Coat Systems, Inc. (“Blue Coat” or the “Company”) (NASDAQ:BCSI) between February 20, 2004 and May 27, 2004, inclusive, (the “Class Period”). The lawsuit was filed against Blue Coat, Brian M. NeSmith and Robert Verheecke (“Defendants”).
If you are a member of this class and wish to view a copy of a complaint and join this class action, please e-mail us at [email protected] and request a copy of the complaint and a plaintiff certification. If you are a member of the Class, you may move the Court no later than June 10, 2005 to serve as a lead plaintiff for the Class. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. However, if you choose to remain an absent class member, unless and until a class is certified, you are not represented by counsel.
The complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that Blue Coat and its executives failed to disclose or misrepresented that the Company would be unable to maintain its sequential rate of sales growth, that its operating costs were increasing dramatically, and that its gross margin levels attained in the third fiscal quarter of 2004 were unsustainably high. Defendants maintained that gross margins would fall in the 68% to 69% range for the fiscal fourth quarter, when they knew that this margin level was unrealistic. Shares of Blue Coat rallied in reaction to the announcement of the Company’s first profitable quarter since inception as well as the projections to $38.27 per share. Following the fiscal third quarter earnings announcement, Defendants NeSmith and Verheecke began to sell large amounts of shares, selling 127,877, and 21,400 shares respectively. Shares continued to trade robustly until April 27-29, 2004, when unexpectedly and not driven by Company specific news, the shares dropped $10 per share on extraordinary volume.
Then on May 27, 2005, Blue Coat announced worse than expected results for their fiscal fourth quarter, with sequential revenue growth slowing to 10%, gross margins falling, and earnings below analyst consensus estimates. Shares plummeted $11.45 in reaction to the news to close at $27.80 per share. In the months following this drop the Securities & Exchange Commission (“SEC”) opened an informal investigation into the Company regarding the Company’s fourth quarter earnings announcement. On April 7, 2005, the SEC upgraded the probe to “formal” status.
If you bought Blue Coat securities between February 20, 2004 and May 27, 2004, inclusive, and would like to obtain information about the lawsuit, then you are invited to call (800) 495-1868 to speak with an advisor.