PHILADELPHIA, Feb. 10, 2001 (PRIMEZONE) -- The law firm of Spector, Roseman & Kodroff, P.C. announces that a class action lawsuit has been commenced in the United States District Court for the Northern District of California against defendants Foundry Networks, Inc. ("Foundry" or the "Company") (Nasdaq:FDRY), Bobby R. Johnson, Jr. (President, Chief Executive Officer, and Chairman of the Board), Lee Chen (Vice President-Software Engineering, Quality and Assurance), Robert W. Shackleton (Vice President-North American Sales), Ken K. Cheng (Vice President-Marketing and Product and Program Management), H. Earl Ferguson (Vice President-Hardware Engineering), and Timothy D. Heffner (Vice President-Finance and Administration and Chief Financial Officer), on behalf of purchasers of the securities of Foundry between October 18, 2000 and December 19, 2000, inclusive (the "Class Period").
The complaint charges Foundry and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Foundry designs, develops, manufactures and markets an end-to-end suite of high performance networking products for Web-hosting and other companies and Internet Service Providers. The complaint alleges that Foundry concealed and misrepresented the problems it was experiencing due to the problems many of its customers were having raising money and the impact this was causing and would cause on Foundry's future revenue growth. The complaint alleges Foundry concealed this information so that the individual defendants could sell additional shares of their Foundry stock before the bottom fell out of Foundry's stock price. Thus, defendants made positive but false statements about Foundry's business and future revenues during October and November 2000.
The complaint further alleges that in addition to having actual knowledge of the falsity of their statements, each of the defendants had the motive and the opportunity to perpetrate the fraudulent scheme and course of business described herein, in order to sell $113 million worth of their own Foundry shares at prices as high as $89 per share or 580% higher than the price to which Foundry shares dropped at the end of the Class Period, as Foundry's true prospects began to reach the market. In mid-November 2000, after defendants had completed the bulk of their sales, Foundry issued a Form 10-Q which contained many new disclosures about the problems many of its customers might experience in raising money and that Foundry had provided vendor financing to fuel some of its growth. However, Foundry's stock continued to trade at artificially inflated levels as defendants continued to make public statements that demand was strong and that Foundry's biggest problem was keeping up with demand. At least two defendants took advantage of this continued inflation and either sold or filed to sell additional shares of their Foundry stock.
On December 19, 2000, after the market closed, Foundry announced that in the fourth quarter 2000 it would post revenue and EPS declines from the prior quarter. The complaint alleges that this was directly contrary to what Foundry's CEO had told The Wall Street Transcript just weeks before. This disclosure shocked the market, causing Foundry's stock to decline to less than $12-1/8 per share before closing at $13 per share on December 20, 2000.
If you bought the securities of Foundry between October 18, 2000 and December 19, 2000, you may, no later than February 26, 2001, move the court to serve as lead plaintiff of the class, if you choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. 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 Spector, Roseman & Kodroff, P.C., or other counsel of your choice, to serve as your counsel in this action.
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 classaction@spectorandroseman.com. For more detailed information about the firm please visit its Website at http://www.spectorandroseman.com.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pa. and San Diego, Calif., 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. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found at www.primezone.com/ca