PHILADELPHIA, May 10 – LAWFUEL – The Law News Network — The law firm…

PHILADELPHIA, May 10 – LAWFUEL – The Law News Network — The law firm of Spector, Roseman & Kodroff, P.C. announces that a securities class action lawsuit was commenced in the United States District Court for the Northern District of California, on behalf of purchasers of the common stock of Blue Coat Systems, Inc. (“Blue Coat” or the “Company”) (Nasdaq: BCSI – News) between February 20, 2004 through May 27, 2004, inclusive (the “Class Period”).

The Complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements contained in press releases and filings with the Securities and Exchange Commission during the Class Period. Specifically, the Complaint alleges that Blue Coat and certain of the Company’s executive officers (collectively “defendants”) with violations of federal securities laws. Plaintiff claims defendants’ omissions and material misrepresentations artificially inflated the Company’s stock price, inflicting damages on investors. Blue Coat is a developer and distributor of “proxy” software, which helps corporations control employee access to Internet websites and to potentially dangerous downloadable files. Since its founding in 1996 through the beginning of the Class Period, Blue Coat had never turned a profit. On February 19, 2004, Blue Coat announced an unprecedented increase in sales and its first profitable quarter. Defendants stated in a conference call a belief that gross margins in the following quarter would fall in the range of 68-69%. The stock price subsequently rose to $38.27 on February 20, 2004, on unusually high volume of 1.3 million shares. The Complaint charges that unbeknownst to investors, these gross margin calculations did not reflect any realistic expectations as to what could be achieved, given material business issues of which the defendants would have been aware. Soon after the February 19 conference call, certain defendants began selling large blocks of shares, at prices ranging from $40-52 per share.

On May 27, 2004, Blue Coat made an announcement that its purported gross margin calculations had fallen short for the fourth quarter of fiscal 2004 and profitability was lower than that achieved in the third quarter. The next trading day, May 28, 2004, Blue Coat shares fell $11.45 per share to close at $27.80 per share. By August 2004, Blue Coat shares fell as low as $10 per share before recovering to approximately the $20 level.

In the summer of 2004, the SEC began an informal inquiry into trading of Blue Coat stock, which the Company initially characterized as involving only “individuals or organizations outside the company.” By early 2005, however, the SEC had upgraded its inquiry to a formal investigation. Instead of only individuals or organizations outside the Company, the SEC was now focusing on “whether certain present or former officers, directors, employees, affiliates or others made intentional or non-intentional selective disclosure of material nonpublic information, traded in the Company’s stock while in possession of such information, or communicated such information to others who thereafter traded in the Company’s stock.”

If you purchased Blue Coat Systems, Inc. securities during the Class Period, you may, no later than June 13, 2005, move to be appointed as a Lead Plaintiff in this class action. A Lead Plaintiff is a representative, chosen by the Court, that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the “largest financial interest” in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the “largest financial interest,” and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth.

If you have sustained substantial losses in Blue Coat Systems, Inc. securities during the Class Period, please contact Spector, Roseman & Kodroff, P.C. at [email protected] for a more thorough explanation of the Lead Plaintiff selection process. If you have relatively small losses, your ability to participate in any recovery will be protected by the Lead Plaintiff(s), and you need take no affirmative steps at this time.

If you wish to join this action, please visit If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel Robert M. Roseman toll-free at 888-844-5862 or via e-mail at [email protected] For more detailed information about the firm please visit its website at

Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm’s reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered through judgments and settlements on behalf of thousands of defrauded shareholders and companies.

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