NEW YORK-Sept. 8, 2005- LAWFUEL – The Law News Network -The law firm of Milberg Weiss Bershad & Schulman LLP announces that a class action lawsuit was filed today, on behalf of all persons who purchased or otherwise acquired the securities of ATI Technologies Inc. (“ATI” or the “Company”) (NasdaqNM: ATYT), between October 7, 2004 and June 22, 2005, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss’s website at: http://www.milbergweiss.com
If you purchased or otherwise acquired the securities of ATI between October 7, 2004 and June 22, 2005, inclusive, and sustained damages, you may, no later than October 17, 2005, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad & Schulman LLP, or other counsel of your choice, to serve as your counsel in this action.
The action, case no. 05-CV-4816, is pending before the Honorable Thomas N. O’Neill, Jr. in the United States District Court for the Eastern District of Pennsylvania against defendants ATI, Kwok Yuen Ho (Chairman), David E. Orton (President and CEO), and Patrick G. Crowley (CFO). According to the complaint, defendants violated sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5, by issuing a series of material misrepresentations to the market during the Class Period.
The complaint alleges that ATI designs and manufactures graphics processing products and technology for desktop and notebook personal computers (“PCs”), and for consumer electronic devices. Throughout the Class Period, ATI reported strong financial results in publicly disseminated press releases and in filings with the SEC. In addition, defendants repeatedly issued positive guidance, claiming that ATI’s purported leadership in graphics and multimedia technologies in the consumer electronics and PC markets would “continue driving growth for ATI in fiscal 2005.” As a result of these statements, the price of ATI stock became artificially inflated during the Class Period. Certain Company insiders, including defendants Kwok Yuen Ho and David E. Orton took advantage of the artificial inflation in the price of the Company’s stock, and during the Class Period, each sold approximately 40% of their personally-held ATI stock for total proceeds of over $54 million. Ho and his wife had allegedly engaged in a similar pattern of insider trading in 2000, and reaped $7 million in proceeds therefrom.
The truth began to emerge on June 6, 2005. On that day, ATI warned that its revenues for the third quarter 2005 would be $530 million, 5% below the Company’s guidance. The Company stated that a shift in its product mix towards the lower end of the desktop and notebook market contributed to a decline in gross margin for the quarter. In addition, ATI claimed that the production of integrated graphics processor products, which had margins well below the corporate average, contributed to lower profit margins, and stated that it was experiencing lower than anticipated yields on certain products due to operational issues. As a result, the Company lowered its guidance for its third and fourth quarter of 2005. In reaction to this news, the price of ATI stock fell $1.58, or 10.3%, from its previous trading day’s closing price of $15.26 per share, to close at $13.68 on June 7, 2005. On June 23, 2005, the Company revealed in a press release that it had experienced a net loss of $400,000 in the third quarter 2005, compared to a $49 million profit in the same period in 2004. In addition, defendants slashed their guidance for the fourth quarter, projecting revenues to be approximately $550-580 million, 10% lower than previously projected, and that gross margins to be 29-30%, approximately 5% lower than defendants’ previous guidance of 34%. In reaction to this news, the price of ATI stock declined even further, falling $0.98, or 7.6%, to close at $11.80 on June 23, 2005. On the same day, Smartmoney.com published an article stating that ATI’s disappointing results and lower guidance was due, in part, to the Company’s “difficulty in rolling out its new graphics processor, while supercharged competitor Nvidia (NVDA) is already in full production with its new high-end GeForce 7800 GTX processor. And as the topper, ATI’s sitting on a fat pile of inventory, some $456 million worth — much more than the $255 million it had at the end of fiscal 2004.”
Milberg Weiss Bershad & Schulman LLP (http://www.milbergweiss.com) is a firm with over 100 lawyers with offices in New York City, Los Angeles, Boca Raton, Delaware, and Washington D.C. and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others for nearly 40 years. Please contact the Milberg Weiss website for more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:
Steven G. Schulman
Peter E. Seidman
Andrei V. Rado
One Pennsylvania Plaza, 49th fl.
New York, NY 10119-0165
Phone number: (800) 320-5081
Email: [email protected]