Investors who saw their shares in Apple Computer and Loudcloud drop
in value have this week filed lawsuits alleging that the companies
in question misled them by publicly predicting healthy profits.
In July 2000, it is alleged that Apple introduced its new Power
Mac G4 Dual Processor, G4 Cube and iMac personal computers,
representing that they were exceptionally powerful, fast and
attractive, coming with particularly attractive designs and
containing new and revolutionary features.
Apple is also said to have claimed that the development of these
new products was completed, they were ready for mass production and
would be available in quantity very shortly. In addition, it is
alleged that Apple forecasted strong revenue and earnings per share
(EPS) for that quarter.
However, just over three weeks after the alleged announcement,
Apple revealed revenue and EPS figures much less than those
predicted, shocking investors, and blaming the shortfall on poor
sales to its education market and poor consumer acceptance of its
personal computer products.
In addition, contrary to the optimism regarding the release of
the new computers, some of the products were late to the market,
had defects and lacked features which were essential for market
success, according to the class action lawsuit. The resulting stock
decline wiped out over $10 billion of Apple’s market capitalisation
in just a few days.
A second case has been brought against Loudcloud, the current
venture of Netscape founder Marc Andresson. Like the case against
Apple, it is alleged that Loudcloud’s omissions resulted in
investors overpaying for stock. The California based e-business
services company is accused of failing to disclose important
information including plans to restructure and the cancellation of
a major contract.
