Michael D. Braun (167416)
Patrice L. Bishop (182256)
STULL, STULL & BRODY
10940 Wilshire Boulevard
Suite 2300
Los Angeles, CA 90043

Jules Brody
Aaron Brody
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017

Attorney for Plaintiff

Plaintiff, through his attorneys, brings this action on behalf of himself and all others similarly situated, and on personal knowledge as to himself and his activities, and on information and belief as to all other matters, based on investigation conducted by counsel, hereby alleges as follows:

1. This is a securities class action on behalf of all persons who purchased or otherwise acquired the publicly traded securities of P-Com, Inc. ("P-Com" or the "Company") between April 15, 1997 and September 11, 1998 (the "Class Period"). P-Com is publicly traded on Nasdaq under the ticker symbol "DCMS." P-Com supplies equipment and services for access to worldwide telecommunications and broadcast networks. This action arises out of defendants' dissemination of false and misleading statements about P-Com's business, operations and prospects, which statements were made for the purpose of allowing the individual defendants herein to sell off over 672,000 shares of their P-Com stock at prices as high as $23 per share for proceeds of more than $13.1 million and allowing P-Com to use (sell) $42 million worth of P-Com stock as currency to acquire Central Resources Corporation ("CRC") RT Masts Limited ("RT Masts") and Telematics, Inc. ("Telematics").

2. In mid-May 1998, P-Com shares began a precipitous decline, falling 65% from $2O in mid-May to $7 in July, as it began to leak out that P-Com's earnings would fall short of analysts,' estimates for 2Q98. Then, on July 16, 1998, the defendants confirmed the foregoing suspicions by stating that "due to the intensely competitive environment for [the Company's point-to-point . . . radio products," P-Com would earn a mere $0.01 per share for 2Q98 versus analyst expectations of $0.15 and earnings per share of $0.10 in 2Q97. P-Com's stock price fell to around $7 upon this revelation, a 76% decline from its Class Period high, as defendants attempted to affect a "soft landing", i.e., slowly revealing the true extent of their false statements and the reasons for P-Com's horrible financial performance in order to avoid liability from victimized P-Com shareholders. Consequently, P-Com's stock continued to trade at artificially inflated prices throughout the remainder of the Class Period as defendants maintained that P-Com's revenues would grow 13%-14% in 1998. On September 11, 1998, P-Com finally admitted that it would: (i) completely restructure its business; (ii) cut its work force by 10%; (iii) cut management's pay by 10%; (iv) write off $5-$30 million in inventory; and (v) experience declining 1998 revenues. Upon this revelation, P-Com stock again collapsed and has since traded in the $2-$4 range. Thus, during the Class Period, P-Com stock has declined 90% in price, wiping out hundreds of millions of dollars in P-Com's market capitalization.

3. By the spring of 1997, each of the individual defendants named herein had recognized that due to several factors, P-Com was suffering a dramatic slowdown in the rate of growth in its core point-to-point radio business. As rumors about P-Com's slowing growth reached the market, the price of P-Com dropped by almost 33% to less than $15 per share. The defendants realized that if they disclosed the truth and confirmed that its rate of growth had fallen, the price of P-Com stock would completely collapse, as the defendants had led the securities markets to expect continuing strong sequential revenue growth from P-Com. The prospect of a sudden decline in the price of P-Com common stock concerned the defendants as a substantial portion of their wealth consisted of P-Com stock, and thus any decline in P-Com's share price would result in substantial harm to each of the defendants. Moreover, the defendants' plan to diversify away from P-Com's core point-to-point business was predicated upon P-Com's ability to complete several acquisitions, and reinflating the price of P-Com's shares was instrumental to defendants, plan as it would enable P-Com to close such acquisitions on a non-dilutive basis.

4. Thus, in an effort to stave off any decline in the price of P-Com's common stock, the defendants began issuing a series of false and misleading statements while simultaneously offering extraordinarily lenient credit terms to customers in order to continue to post revenue growth in line with P-Com's historical rate of growth -- even in the face of severe price competition. Although this strategy caused P-Com's accounts receivable to balloon, it nevertheless enabled P-Com to continue to post sequential revenue gains and, more importantly, report stable gross profit margins which thereby provided the individual defendants the necessary platform to represent to the securities markets that P-Com was unaffected by the fierce price competition going on in P-Com's markets. Defendants' misconduct allowed them to artificially inflate and maintain the price of P-Com stock long enough to: (i) allow P-Com to acquire CRC, RT Masts, and Telematics for a total of $42 million in inflated P-Com stock, thereby allowing P-Com to diversify away from its core point-to-point radio business which was suffering severe price competition; (ii) enable the individual defendants to sell 672, 000 of their P-Com shares -- 74% of their aggregate holdings -- for $13.1 million; and (iii) allow P-Com to raise $100 million by selling bonds at a 4-1/4% rate of interest -- extremely favorable financing terms -- due in large part to the fact that the bonds were ultimately convertible into shares of rapidly appreciating P-Com stock.

5. Throughout the Class Period, the defendants issued false and misleading statements to the securities markets for the purpose of selling P-Com shares. For example, defendants represented:

• P-Com was booking multiple new orders and experiencing "strong demand for [its] entire product line."

• P-Com's "financial performance continue[d] to meet [its] internal goals."

• P-Com's acquisitions were expected to strengthen P-Com's equipment offerings.

• P-Com had "made, significant progresses towards integrating [them] into [its] operations."

6. Moreover, when P-Com's stock declined in the 4Q97, such decline was labeled as merely an "overreaction." Defendants further represented that demand for P-Com's products remained "very strong," as P-Com 'was enjoying "increased market penetration." In fact, defendants claimed that P-Com's acquisitions had strengthen[ed] [its] relationship with [its] customers" and it was these "opportunities to further grow [ its I business" that were helping P-Com to deliver "positive results" which ensured that P-Com would "be a by the end of the year billion-dollar company2003." Defendants reiterated that P-Com would achieve this phenomenal growth through both "internal growth and acquisition," as P-Com's management team really knew "how to steer -this business to the billion-dollar mark. Based upon this continued strong growth, the defendants assured investors and securities analysts that P-Com would grow its sales in the 35-40% range over the next 3-5 years while maintaining gross margins in the 40%-45% range on its way to achieving earnings per share of $0.15 and $0.75 for 2Q98 and FY98, respectively.

7. In fact, during the Class Period, P-Com was experiencing severe price competition from large original equipment manufacturers ("OEM") such as Ericcson Corporation,, particularly in its key U.S. and European markets, as certain of P-Com's competitors, which relied on Latin America and Asia as their key markets, looked to the U.S. and European markets to recover sales opportunities they were losing in the deteriorating Latin America and Asian markets. There difficulties were causing P-Com to lower its prices and suffer delays in bookings as customers postponed orders while negotiating -- in a clear buyers market -- for the best price available. In order to avoid revealing these problems, defendants falsified P-Com's financial results reported during the Class Period by improperly recognizing revenue and by failing to take write-downs for the excess and obsolete inventory the Company held. On July 16, 1998, when the defendants disclosed that P-Com would earn $0.01 versus expectations of $0.15, P-Com stock dropped to $7-7/8. Then, on September 11, 1998, defendants finally revealed that P-Com's entire business needed to be restructured, that it would take a huge inventory write-off of $5-$30 million and that its 1998 sales would decline. Upon these revelations, P-Com stock traded even lower, and has since traded in the $2-$4 per share range.

8. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§1331 and 1337, and §27 of the Securities Exchange Act of 1934 (the "Exchange Act") (15 U.S.C. §78aa).

9. This action arises under §§10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder (17 C.F.R. §240.10b-5).

10. Venue is proper in this district pursuant to §27 of the Exchange Act and 28 U.S.C. 1391(b) because the acts charged herein, including the dissemination of materially false and misleading information, occurred in this district. Defendant P-Com also maintains its principal place of business in this district at 3175 S. Winchester Boulevard, Campbell, California 95008.

11. In connection with the acts alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications and the facilities of the national securities markets.

12. Plaintiff Robert Schmidt purchased 1,490 shares of P-Com common stock through the Class Period at various prices. Plaintiff also purchased 27 option contracts during the Class Period. Plaintiff has been damaged as a result of defendants' conduct alleged herein.

13. Defendant P-Com is a Delaware corporation headquartered in Campbell, California. P-Com is a worldwide supplier of equipment and services for access to telecommunications and broadcast networks. As of June 30, 1998, P-Com had 43 million shares outstanding.

14. Defendant George P. Roberts ("Roberts") was, at all relevant times, Chairman of the Board of Directors and Chief Executive Officer of P-Com. During the Class Period, Roberts sold 240,000 P-Com shares at prices ranging from $19-$21 per share, 81% of the P-Com shares actually owned by him reaping over $4.7 million;

15. Defendant Pier G. Antoniucci ("Antoniucci") was, at all relevant times, President and Chief Operating Officer of P-Com. During the Class Period, Antoniucci sold 156,558 shares of his P-Com stock at prices ranging from 616.69 to $22.77, more than 74% of the P-Com shares actually owned by him for proceeds of more than $3 million;

16. Defendant Michael J. Sophie ("Sophie") was, at all relevant times, Chief Financial Officer of P-Com. During the Class Period, Sophie sold 103,528 P-Com shares at prices ranging between $18.50 to $21.50, or 95% of his total holdings, reaping over $2.0 million;

17. Defendant Kenneth E. Bean, III ("Bean") was, at all relevant times, Senior Vice-President of Quality Assurance of P-Com. During the Class Period, Bean sold 28,296 P-Com shares at prices ranging from $16.69 to $19.75 per share, representing 96% of his total holdings, reaping over $516,000;

18. Defendant John R. Wood ("Wood") was, at all relevant times, Senior Vice President of Advanced Technologies of P-Com. During the Class Period, Wood sold 65,665 shares at prices ranging from $19.57 to $21.00 per share, or more than 50% of the P-Com shares owned by him, for proceeds of more than $1.3 million;

19. Defendant Gill Cogan ("Cogan") was, at all relevant times, a director of P-Com. During the Class Period, Cogan sold 64,000 shares at prices ranging from $20.55 to $20.90, or more than56% of the P Com shares owned by him, for proceeds of more than $1.3 million;

20. Defendant John A. Hawkins ("Hawkins") was, at all relevant times, a director of P-Com. During the Class Period, Hawkins sold 14,000 P-Com shares at prices ranging from $16-13 to $23.00 per share, or 100% of the shares owned by him, for proceeds of over $250,000.

21. Defendants Roberts, Antoniucci, Sophie, Bean, Wood, Cogan and Hawkins are referred to herein as the "Individual Defendants." By reason of their stock ownership, management positions, and/or membership on P-Com's Board, the Individual Defendants were controlling persons of P-Com and had the power and influence, and exercised the same, to cause it to engage in the illegal conduct complained of herein. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each "group published" information, the result of the collective action of the Individual Defendants.

22. As officers, directors and/or controlling persons of a Company registered with the SEC under the federal securities laws, whose common stock is registered with the SEC, traded on the NASDAQ, and governed by the provisions of the federal securities laws, the Individual Defendants each had a duty to disseminate truthful information promptly and accurately with respect to the Company's operations, products, markets, management, earnings and business prospects, to correct any previously issued statements that had become materially misleading or untrue, and to disclose any trends that would materially affect earnings and the financial results of P-Com, so that the market price of the Company's publicly traded securities would be based upon truthful and accurate information. Under rules and regulations promulgated by the SEC under the Exchange Act, the Individual Defendants also had a duty to report all trends, demands or uncertainties that were likely to influence (a) P-Com's liquidity; (b) P-Com's net sales, revenues and/or income; and (c) previously reported financial information such that it would not be indicative of operating results. The Individual Defendants' representations during the Class Period violated these specific requirements and obligations.

23. The Individual Defendants, because of their positions with the Company, controlled and/or possessed the power and authority to control the contents of P-Com's quarterly and annual reports, press releases and presentations to securities analysts, which information was conveyed through the analysts to the investing public. Each defendant was provided with copies of the Company's reports and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected.

24. Because of their positions and access to material non-public information available to them but not to the public, each of these defendants knew or recklessly disregarded that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the positive representations which were being made were then materially false and misleading. Each of the defendants willfully participated in the issuance of the false statements complained of herein, which false statements were made for the purpose of offering to sell and selling: (i) $13.1 million of their own P-Com stock; (ii) exchanging (selling) $42 million worth of P-Com shares used to acquire CRC, RT Masts and Telematics; and (iii) selling $100 million of P-Com debt securities, which were priced advantageously based upon the artificial inflation in P-Com's stock price.

25. Defendants are also each liable as individual participants in a fraudulent scheme and course of conduct that operated as a fraud and/or deceit upon the class. Because of their executive, managerial and/or directorial positions with the Company, each of the defendants had access to the adverse, non-public information about the business, finances and future business prospects of P-Com as particularized herein and acted to misrepresent, misstate or conceal such information from plaintiff and the investing public.

26. It is also appropriate to treat the defendants as a group for pleading purposes under the federal securities laws and the Federal Rules of Civil Procedure and to presume that the false and misleading information complained of herein was disseminated through the collective actions of the defendants. Defendants were involved in the drafting, producing, reviewing, and/or disseminating of the false and misleading information detailed herein, knew or recklessly disregarded that such materially misleading statements were being issued by the Company, and/or approved or ratified these statements in violation of the federal securities laws. Defendants' false and misleading statements and omissions of fact consequently had the effect of, both on their own and in the aggregate, artificially inflating the price of the common stock of P-Com at all times during the Class Period.

27. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons who purchased or otherwise acquired shares of P-Com common stock from April 15, 1997 to September 11, 1998 inclusive, and who were damaged thereby (the "Class"). Excluded from the Class are the defendants, officers and directors of the Company, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which defendants have or had a controlling interest.

28. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to plaintiff at this time and can only be ascertained through appropriate discovery, plaintiff believes that there are over a thousand members of the Class. As of June 30, 1998 P-Com had 43 million shares of Common Stock issued and outstanding. P-Com stock was actively traded in an efficient market on the NASDAQ under the ticker symbol "DCMS." Record owners and other members of the Class may be identified from records maintained by P-Com or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions.

29. Plaintiff's claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by defendants' wrongful conduct in violation of the federal law that is complained of herein.

30. Plaintiff will fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class and securities litigation.

31. Common questions of law and fact exist as to all members of the Class and predominate over any questions affecting solely individual members of the Class. Among the questions of law and fact common to the Class are:

(a) Whether the federal securities laws were violated by defendants' acts as alleged herein;

(b) Whether defendants participated in and pursued the common course of conduct complained of herein;

(c) Whether documents, press releases and other statements disseminated to the investing public and the Company's shareholders during the Class Period misrepresented and/or omitted material facts about the business, management, markets, financial condition, and future business prospects of P-Com;

(d) Whether defendants acted with scienter in knowingly or recklessly omitting and/or misrepresenting material facts regarding the financial state of the Company;

(e) Whether the market price of P-Com common stock during the Class Period was artificially inflated due to the material misrepresentations and failure to correct the material misrepresentations complained of herein; and

(f) Whether the members of the Class have sustained damages and, if so, the proper measure of damages.

32. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that:

(a) defendants made public misrepresentations or omitted material facts during the Class Period, as alleged herein;

(b) the misrepresentations and/or omissions were material;

(c) P-Com's common stock was traded in an efficient market;

(d) the misrepresentations and/or omissions alleged tended to induce reasonable investors to misjudge the value of P-Com's shares; and

(e) plaintiff and members of the Class acquired their shares between the time defendants made the misrepresentations and/or omissions and the time the truth was revealed, without knowledge of the falsity of the misrepresentations.

33. Based upon the foregoing, plaintiff and the other members of the Class are entitled to a presumption of reliance upon the integrity of the market for, at least, the purposes of class certification, as well as for ultimate proof of the claims on their merit. Similarly, plaintiff and the members of the Class are entitled to a presumption of reliance with respect to the omissions alleged herein.

34. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this class action.

35. On April 15, 1997, P-Com announced that for 1Q97, it had earned $0.08 per share an sales of $38.1 million versus $0.04 per share on sales of $17.6 million in 1Q97. Defendant Roberts stated:

"Customer demand for P-Com products remains strong. P-Com achieved its 14th consecutive quarter of revenue growth in supporting our customers, equipment needs. Similarly, as we have experienced in the past, we continued to significantly increase our research and development expenditures to develop new products to meet customers requirements."

36. On June 25, 1997, P-Com issued a release stating that it had acquired CRC for 1.5 million P-Com shares valued at $22 million. Defendant Roberts was quoted as stating:

"This acquisition is expected to strengthen P-Com's equipment offerings to network service providers by allowing us to deliver more functionality with our next generation radios . . . . "

"This broadening of our customer base results in $6.5 million in orders and includes organizations utilizing wireline access technology."

37. On July 17, 1997, P-Com issued a release reporting that it earned $4.2 million or $0.10 per share for 2Q97, versus $1.5 million or $0.04 per share for the comparable period of the previous year. Defendant Roberts stated:

"We continue to see strong demand for our entire product line as we further expand our geographic presence. We have close relationships with our customers which allow us to respond quickly to their evolving needs with new products and services."

Defendant Sophie also added:

"Our financial performance continues to 'meet our internal goals. We have made significant progress towards integrating our recent acquisitions into our operations, and we are already beginning to see synergies in our product development and sales efforts."

38. The statements made by defendants between April 15, 1997 and July 17, 1997 were false and misleading when made, as they failed to disclose the following facts which were then known by or available to defendants based upon their access to internal P-Com data, including that:

(a) The acquisition of CRC was not designed to "strengthen P-Com's equipment offerings" but was, in fact, a defensive acquisition designed to diversify P-Com away from its core point-to-point radio business, which was experiencing a dramatic decline in its growth rate due to severe price competition, especially for the key Tel-Link point-to-point radio;

(b) P-Com's financial results had exceeded analysts expectations only by shipping $2.9 million of product to one of its customers, Advanced Radio, which product was not needed and was accepted by Advanced Radio only on a risk-free basis with a right to return any unused product; and

(c) As a result of (a)-(b) above, P-Com's 2Q97 sales, gross margins and assets were overstated by at least $2.9 million.

39. On August 22, 1997, P-Com announced that it received purchase orders in excess of $8 million to supply digital, millimeter wave radio systems and associated services to its major Personal Communication Networks ("PCN") customers in the United Kingdom.

40. On August 22, 1997, P-Com also announced a 2-for-1 stock split. The defendants caused this split in order to send a positive sign to the market that P-Com's business was strong. This split was thus designed to serve as a manipulative device to artificially manipulate the price of P-Com common stock upwards.

41. On September 3, 1997, P-Com announced that it received additional orders from a major OEM distributor for applications in the Middle East valued in excess of $5 million for the supply of digital millimeter wave radio systems and associated services.

42. On September 10, 1997, P-Com announced that its Italian subsidiary had received orders with a combined value in excess of $6.2 million for a project in the GMA Network in the Philippines and another project for the Royal Norwegian Air Force

43. On September 25, 1997, P-Com announced that it had received purchase orders from its German system integrator for the supply of digital millimeter wave radio systems and associated services. These purchase orders, valued in excess of $5.5 million, were in addition to the $8.5 million order previously announced for delivery in 1997.

44. On October 7, 1997, in anticipation of its planned release of lower-than-expected results for the quarter ended September 30, 1997, P-Com announced that it had adopted a shareholder rights plan. Purportedly, defendants had enacted the plan to assure that all stockholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against partial tender offers, squeeze-outs, open market accumulations and other abusive tactics to gain control of the Company. The reality was that the Individual Defendants did not want to lose control of P-Com when its stock ultimately collapsed upon the revelation of the true state of P-Com's business.

45. On October 16, 1997, P-Com issued a release announcing that for 3Q97 P-Com had earned $5.1 million or $0.12 per share versus $2.5 million or $0.06 per share during the comparable period of the previous year. While P-Com's revenues were below analyst estimates, it nevertheless managed to meet analysts earnings per share estimates because P-Com's gross prof it margins were 90 basis points higher than analyst estimates and unexpectedly surged from 40.8% to 43.3%. Defendant Roberts stated:

"Demand for P-Com 13 products and services increased during the third quarter. Our strategy for providing systems and services for worldwide network solutions generated market penetration and created opportunities in new regions around the world."

Additionally, in connection with the release, defendant Sophie stated:

"Our acquisition strategy continued to expand our product and service presence with our customer base."

46. In an effort to avoid a collapse in P-Com's stock price, defendants issued a press release on October 16, 1997, which stated that P-Com's Italian subsidiary had received a $20 million order for the construction of a complete broadcast network for a group of private companies located in Papua, New Guinea. Defendants also announced that subject to market conditions, -- i.e., only if favorable financing terms existed P-Com planned to raise $150 million through a private placement of convertible subordinated notes.

47. The statements made by defendants between August 22, 1997 and October 16, 1997 were each false and misleading when made, as they failed to disclose the following facts which were then known by or available to defendants based upon their access to internal P-Com data, including that:

(a) P-Com was experiencing severe pricing pressures from its competitors, such as Digital Microwave, Innova, Alcatel, Nokia and Ericsson;

(b) Several of the numerous "orders" P-Com was achieving were only achieved as a result of P-Com offering lenient payment terms and these "'orders" did not signify P-Com's health but its weakness;

(c) As, a result of the competition pressure, P-Com was forced to extend lenient payment terms in order to maintain its historical rate of growth without reducing gross profit margins;

(d) The increase in P-Com's days' sales outstanding from 93 to 109 days was a result of the Company's aggressive revenue recognition practices;

(e) P-Com was so concerned about its days' sales outstanding and the risk it imposed upon the company (principally a reduction in cash flow but also significant credit risk), it had hired a new vice President of Operations in August 1997 to specifically address the problem;

(f) P-Com again shipped another $2.1 million worth of product to Advanced Radio in 3Q97, which product Advanced Radio did not need and accepted on a risk-free basis and with a right of return;

(g) As a result, P-Com's 3Q97 revenue, accounts receivable, and gross margins were overstated by an additional $2.1 million in 3Q97.

(h) P-Com's gross margins were artificially inflated and overstated because they had extended ultra-lenient credit terms in order to achieve sales and made at least $2.1 million in shipments to certain of its customers, including Advanced Radio; and

(i) P-Com continued to experience severe pricing pressures in its point-to-point products, particularly its Tel-Link Radios which were causing its actual gross profit margins to decline.

48. On October 17, 1997, the price of P-Com shares fell by $6. However, P-Com stock continued to trade at artificially inflated levels throughout the remainder of the class Period as defendants maintained that P-Com's business fundamentals remained intact and that P-Com's management remained able to manage P-Com's business. For example, on October 17, 1997, defendant Roberts stated:

"This is a really huge overreaction . . . . we sort of got caught in the draft here."

"We're dedicated to continuing to running [sic] (the company) regardless of what Wall Street does . . . . We don't know what wall street does. All we know is how to run our business."

49. On October 22, 1997, P-Com announced in a press release over the Business; Wire that it had secured orders valued in excess of $3.9 Million from various customers for the new line of spread spectrum radios designed for unlicenced point-to-point applications.

50. On October 24, 1997, P-Com issued a release announcing that it had canceled a $150 million note offering. Karl Spurzen, P-Com's Director of Investor Relations, stated:

"We have decided not to pursue this transaction at this time . . . . The stock is down substantially (and) is at a level that is not attractive to the market . . . ."

51. On November 3, 1997, P-Com issued a release that stated it had secured an additional $2.0 million in bookings for its point-to-point spread spectrum product to its system integrator in Canada. Defendant Roberts stated:

"The addition of our Spread Spectrum product line gives P-Com the ability to provide radios from 2.4 GHz up to So GHz which we believe to be the broadest radio offering in the industry. Complementing this equipment with our services Capability of over 200 people in the field gives P-Com an advantage over our many competitors in terms of customer support and capability . . . . "

52. On November 3, 1997, P-Com, announced that it had signed an agreement with CEL Polska S.p.Z.o.o. to provide 38 GHz and 23 GHz point-to-point millimeter wave radios and associated services with Poland as access equipment for their networks. The three-year agreement began with initial orders valued in excess of $1 million. Defendant Antoniucci stated:

"With this agreement P-Com reaps the initial reward of the marketing campaign started earlier in the year with the purpose of establishing a direct presence in the selected markets of Eastern Europe . . . ."

53. On November 5, 1997, P-Com announced in a press release over the Business Wire that it had sold $100 million of 4 1/4% convertible subordinated notes due 2002 (convertible into common stock of the Company at a conversion price of $27.46 per share), in a private placement. The Company stated that it intended to use the net proceeds principally to fund acquisitions, to pay down and terminate the Company's line of credit as well as certain long-term debt, for working capital, capital expenditures and other general corporate purposes.

54. On December 1, 1997, P-Com issued a release announcing that it had received a purchase order valued in excess of $8 million from Winstar Communications for the supply of digital millimeter wave radios for 4Q97 and 1Q98. Defendant Roberts stated:

"Winstar Communications has been and continues to be a highly valued customer of P-Com. We are very pleased to be able to continue to support their aggressive needs as their buildout efforts continue . . . . "

55. On December 8, 1997, P-Com issued a release announcing that it had completed the acquisition of Telematics, a Virginia based company and RT Masts, a United Kingdom-based company. Telematics was acquired for $5 million in P-Com common stock and RT Masts was acquired for $15 million in P-Com common stock. Defendant Roberts stated:

"The completion of these acquisitions marks a significant step toward our goal of broadening P-Com's abilities to meet our customers' requirements and helps to further establish P-Com as a provider of worldwide network solutions. . . . ."

56. On December 10, 1997, P-Com issued a release announcing that it had received an order valued in excess of $9 million from Telkom S.A. Limited, South Africa's largest telecommunications company. Defendant Roberts stated:

"We are pleased to add a high quality company such as Telkom to our customer base and expand our geographical coverage to a very important part of the world . . . . ."

57. On January 22, 1998, P-Com issued release announcing that for 4Q97, P-Com had earned $8.1 million or $0.18 per share versus $4.9 million or $0.11 per share in the comparable period of the previous year. Defendant Roberts stated:

"Demand for P-Com products and services was very strong for the fourth-quarter. For operations activities, we have added 57,000 square feet of capacity in the Silicon Valley and dedicated approximately 30,000 square feet in Italy. In addition, P-Com continues to spend heavily in research and development to provide the products and services our customers desire. These efforts have resulted in increased market penetration, geographical coverage and a year end backlog of $65.2 million."

In the release, defendant Sophie also stated:

"Our strategy of providing service capabilities to complement our equipment offering, in response to customer requests, allows P-Com to offer network solutions and increased value to our customers. We believe this will continue to strengthen our relationship with our customers."

58. The statements made by defendants between October 17, 1997 and January 22, 1998 were false and misleading when made as they failed to disclose the following facts which were then known by or available to defendants based upon their access to internal P-Com data, including that:

(a) P-Com had only achieved the Q97 numbers by providing last-minute sales incentives, including lenient financing terms to its customers;

(b) P-Com was facing severe pricing pressure from its competitors -- including Digital Microwave, Innovan, Ericsson and Alcatel;

(c) The rate of growth in P-Com's core point-to-point radio business had slowed dramatically due to severe pricing pressure on the Tel-Link point-to-point radio product;

(d) It was only through the additional revenues secured through P-Com's acquisition of RT Masts, Telematics and CRC that P-Com was able to achieve 4Q97 revenue forecasts;

(e) P-Com sold $100 million in notes because it was hemorrhaging cash and desperately needed additional cash to survive;

(f) In order to reduce its accounts receivables, P-Com was engaging in a process of factoring -- i.e., selling off its accounts receivable -- at increasing discounts in an attempt to convert P-Com's receivables into badly needed cash while concealing the true deterioration in P-Com's balance sheet;

(g) As a result of the significant difficulties in the point-to-point market, particularly in P-Com's key U.S. market, several of P-Com's key customers -- including Orange PLC, Mercury One-2-One and Mannesmann -- had informed P-Com that they would likely delay their scheduled 1998 orders until all market participants had the opportunity to bid;

(h) The November 3, 1998 announcement regarding the $1 million agreement to provide .38 GHz ratio to CEL Polska was false and misleading because it failed to reveal that 38 GHz products were sold under severe pricing pressures and thus sold at razor-thin or non-existent margins;

(i) As a result of (a)-(h), P-Com's gross margins were actually declining as P-Com was forced to compete on price to achieve sales; and

(j) As a result of (a)-(h) the visibility of P-Com's revenues and earnings in 1998 was declining.

59. On February 25, 1998, P-Com issued a release announcing an agreement with an initial 64 million purchase order for point-to-multipoint digital millimeter wave radio systems from a major European telecommunications equipment manufacturer and systems provider. In connection with the release, defendant Roberts stated:

"We are proud of the recognition our technology has received by such an important world wide telecommunications equipment and systems provider . . . ."

60. On April 1, 1998, P-Com issued a release announcing that P-Com had completed the acquisition of the assets of Wireless Communications Group of Cylink Corp. for $46 million in cash and a $14.5 million note. Defendant Roberts stated:

"This acquisition provides us with products that complement and broaden our existing digital millimeter wave product lines. We are also pleased to have such a talented group join us at P-Com. Their skills and experience are a great addition to our existing technical capabilities . . . ."

Defendant Sophie stated:

"We believe that the global distribution network that we gain in this acquisition will provide future opportunities for our existing product lines. We see a growing number of opportunities for our products and services around the globe. This acquisition will strengthen P-Com's position and ability to capture these opportunities . . . . "

61. On April 16, 1990, P-Com issued a release announcing that for 1Q98 P-Com earned $5.1 million or $0.12 per share (excluding one time charges) versus $1.7 million or $0.04 per share in the comparable quarter, of the previous year. Defendant Roberts stated;

"Our efforts in the quarter were highlighted by successfully completing the acquisition of certain of the assets of the Wireless Communications Group from Cylink Corporation.

"We believe this transaction will position P-Com well in important regions of the world where we can leverage our technology, products and services. Globally, demand remained strong during the quarter for point-to-point and spread spectrum radio products as deregulation trends have continued to provide opportunities to further grow our business."

Defendant Sophie added:

"We believe the successful operating results for the quarter which included a 33% sales growth and 200% earnings per share growth as compared to the first quarter of 1997 are indicative that our strategies of customer-oriented research and development and acquisitions which focus on complementary products, increased marketing channels, and new technology are delivering positive results."

62. On April 16, 1998, P-Com also issued a release announcing that it had signed a memorandum of understanding with a major European telecommunications company for the joint development of an ATM-based point-to-multipoint radio system. The jointly developed product would address the needs of the wireless broadband access market on a worldwide basis. Defendant Roberts stated:

"P-Com has a leadership position in point-to-multipoint technology and our partner is equally strong in the switching and ATM technologies. This combined development effort will provide a timely and cost-effective solution for networks around the world . . . .

63. On April 19, 1998, P-Com was featured in an article in the Knight-Ridder Tribune Business News and the San Jose Mercury News. In the article, defendant Roberts was reported to have stated that P-Com would be a $1 billion company in five years, largely through acquisitions. Defendant Roberts stated:

"We're still in the 'collecting' phase . . . . We have an international management team that knows how to make the right acquisitions and meld them together."

"We stay focused on what we're doing . . . . "

64. The statements made by defendants between February 25, 1998 and April 19, 1998 were false and misleading when made, as they failed to disclose the following facts which were then known by or available to defendants based upon their access to internal P-Com data, including that:

(a) P-Com was experiencing severe pricing pressure in its point-to-point business across the board, and in particular in the U.S. and European markets, as P-Com's competitors were intensely focusing on the U.S. and European markets in an effort to replace lost sales opportunities in the Asian and Latin American markets which served as the key sales markets for P-Com's competitors;

(b) As a result of the intense price competition, P-Com's existing customers, and in particular new customers, were delaying orders in order to obtain more favorable prices;

(c) P-Com's key point-to-point products, the Tel-Link and 38 GHz radios, were under severe price pressures;

(d) As, P-Com struggled for sales, it continued to extend ever more lenient payment terms to customers which again caused its days, sales outstanding to balloon, as sales were booked as accounts receivable and customers delayed paying on them, causing severe cash flow problems;

(e) As a result, P-Com's cash levels were declining to alarming levels and P-Com's cash flow was woefully inadequate;

(f) As a result of (a)-(d), P-Com's inventory rose by 29% in 1Q98 -- including $26.18 million in finished goods inventory which only exacerbated P-Com's cash flow problems;

(g) The severe erosion in P-Com's point-to-point business necessitated huge R&D expenditures on P-Com's point-to-multipoint business, which was behind schedule and could not be delayed, and thus further exacerbated P-Com's cash flow problems;

(h) As a result of (a)-(g), it was impossible for P-Com to achieve EPS of $0.15 in 2Q98 or $0.72 in FY98.

65. On April 27, 1998, P-Com issued a release announcing a new generation of' point-to-point radios designed to exploit new technology in order to broaden the application range of the present Tel-Link(r) series. Defendant Antoniucci stated "The new point-to-point microwave and millimeter wave radio generation, in association with the point-to-multipoint product plus the complete offerings of spread spectrum radio extended upward to 4T1 and 4EI and downward to 19 Kb/s, makes P-Com a unique one stop-shop vendor for wireless operators . . . ."

66. On April 30, 1998, P-Com issued a press release over the Business Wire and, announced that it had received orders worth more than $11 million for products associated with spread spectrum radios, which operate in the unlicenced frequency band of 2.4 and 5.7 GHz. Defendant Roberts stated:

"The market for spread spectrum radio products is robust. The order flow and, amount of bid activity demonstrates the strategic value of adding this product to the P-Com product family . . . ."

Defendant Sophie stated:

"We are pleased with the progress we have made in increasing our presence in the spread spectrum market and feel we are well positioned to pursue this market opportunity . . . ."

67. On June 17 , 1998, Defendant Roberts, in an interview with The Wall Street Corporate Reporter, stated:

"We will continue to do acquisitions because the vision of the company is to be a billion-dollar company by the end of the year 2003. We will do that through internal growth-and acquisition.

* * *

I would show them the history of P-Com and would show them how the investors who invested in us early on have profited. I would then try to get them involved with our management team to prove to them that we have the very best management team for an international company in telecom that you will find. That should give them that comfort that we really do know how to steer this business to the billion-dollar mark. I would demonstrate our equipment for, them, as we have done in the past, because that seems to work.

68. The statements made by defendants between April 27, 1998 and June 17, 1998 were false and misleading when made, as they failed to disclose the following facts which were then known by or available to defendants based upon their access to internal P-Com data, including that:

(a) P-Com was experiencing severe pricing pressure in its point-to-point business in its key U.S. and European markets, as its competitors, who relied on the Latin American and Asian markets as their key markets, were intensely focusing on the U.S. and European markets in an effort to replace lost sales opportunities in the Asian and Latin American markets;

(b) As a result of the intense price competition, P-Com's major U.S. and European customers, and in particular new customers, were delaying orders in order to obtain more favorable prices;

(c) As P-Com struggled for sales, it continued to extend ever more lenient payment terms to customers which again caused its days' sales outstanding to balloon as sales were booked as accounts receivable and customers delayed paying on them, causing severe cash flow problems;

(d) As a result, P-Com's cash levels were declining to alarming levels and its cash flow was inadequate;

(e) While demand for P-Com's spread spectrum products was robust, demanded for P-Com's Tel-Link and 38GHZ products, which were far more significant to P-Com at over 60% of P-Com's revenues, were under severe price pressure; and

(f) As a result of (a)-(e), P-Com's inventory rose by 29% in 1Q98 -- including $26.18 million in finished goods inventory -- which only exacerbated P-Com's cash flow problems.

69. On July 16, 1998, P-Com shocked the securities markets when it disclosed that P-Com would earn only $0.01 per share in 2Q98, 93% lower than the $0.15 per share the defendants had led the market to expect due to "the intensely competitive environment for point-to-point (PTP) radio products." P-Com also disclosed that its gross profit margins had declined from the "strong" 40%-45% level defendants had repeatedly boasted about during the Class Period to a mere 38% and that its days' sales outstanding had ballooned to 113 days as its accounts receivable rose to $79 million. When P-Com opened for trading on July 17, 1998, the price of P-Com stock traded approximately 63% lower than its mid-May 98 levels, or at approximately $7 per share. However, the price of P-Com shares continued to trade at artificially inflated levels throughout the remainder of the Class Period as defendants continued to maintain that P-Com's business was solid and revenues would grow by 13%-14% in 1998.

70. On September 11, 1998, P-Com once again shocked the securities markets when it revealed that it was reducing its entire work force by 10%, cutting its executive salaries by 10%, taking a huge inventory write-down of $5-$30 million and that its 1998 sales would decline from 1997 levels as it would suffer a $0.39 loss in 3Q98 versus expectation of breakeven results. Upon the dissemination of this information, P-Com stock again declined and has since traded as low as $2 per share.

71. During the Class Period, each of the Individual Defendants who were senior executives and/or directors of P-Com were privy to confidential and proprietary information concerning P-Com, its operations' finances, financial condition, products and present and future business prospects, including terms of sales, customer returns, price protection promotions, credit allowances and customer inventory levels. These defendants also had access to and knew of, or were reckless in not knowing of, material adverse non public information concerning P-Com's present and future financial condition.

72. Each of the Individual Defendants was provided with copies of P-Com's management reports, press releases and SEC filings alleged herein to be misleading prior to, or shortly after their issuance. All of the Individual Defendants had the ability and opportunity to prevent their issuance or cause them to be corrected. As a result, each of the Individual Defendants is responsible for the accuracy of the public reports and releases detailed herein as "group published" information and are therefore responsible and liable for the representations contained therein.

73. During the Class Period, the defendants, directly and indirectly, engaged and participated in a continuous course of conduct to misrepresent the results of P-Com's operations and to conceal adverse material information regarding the finances, financial condition, and results of operations of P-Com as specified herein. Defendants employed devices, schemes, and artifices to defraud, and engaged in acts, practices, and a course of conduct as herein alleged in an effort to increase and maintain an artificially high market prices for the common stock of the Company. This included the formulation, making, and/or participation in the making of untrue statements of material facts, and the omission to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, which operated as a fraud and deceit upon plaintiff and the other members of the Class.

74. The defendants are liable, jointly and severally, as direct participants in the wrongs complained of herein. Defendants had a duty promptly to disseminate accurate and truthful information with respect to P-Com's products, operations, financial condition and future business prospects or to cause and direct that such information be disseminated so that the market price of P-Com stock would be based on truthful and accurate information.

75. As offices, directors and/or controlling persons of a publicly held company whose common stock is registered with the SEC under the Exchange Act, traded on the NASDAQ National Market System, and governed by the provisions of the Exchange Act, defendants had a duty to promptly disseminate accurate and truthful information with respect to the Company's operations, business, products, markets, management, earnings and present and future business prospects, to correct any previously issued statements from any source that had become untrue, and to disclose any trends that would materially affect earnings and the present and future financial operating results of P-Com, so that the market price of the Company's publicly traded securities would be based upon truthful and accurate information.

76. Since early 1997, at the latest, the Individual Defendants, were aware of the existence of inadequate internal controls and/or recklessly disregarded their obligation to implement adequate controls to ensure that revenues were properly recorded in compliance with GAAP. These defendants had a responsibility to maintain sufficient accounting controls to accurately report P-Com's financial results. The representations made by defendants in P-Com's financial statements and in other financial disclosures to the public were the representations of P-Com's management. Contrary to the requirements of GAAP and SEC rules, defendants failed to implement and maintain an adequate internal accounting control system.

77. Each defendant had the opportunity and motive to commit the acts alleged herein. By virtue of their positions with P-Com and because of the significant reputational and monetary benefits they stood to gain from a positive public perception of P-Com and as a result of artificially inflated stock prices, defendants had both the opportunity and motive to commit the acts alleged herein. Defendants were aware of P-Com's true financial condition yet recklessly disregarded the limitations of the Company. The air of accomplishment and success created as a result of defendants' material misrepresentations made P-Com more attractive to potential investors, and served to maintain its stock price at artificial levels.

78. Each defendant had the opportunity to commit and participate in the fraud. The Individual Defendants were the senior officers of P-Com and they controlled press releases, corporate reports, communications with analysts, public filings, and the reporting of the Company's financials. Thus, these defendants controlled the public dissemination of P-Com's false and misleading statements to the investing public as alleged herein which artificially inflated the price of P-Com's stock.

79. Each of these defendants also had the motive to commit and participate in the fraud in order to gain pecuniary benefits. The Individual Defendants each personally profited from the fraud by selling over $13.1 million of P-Com stock during the Class Period at prices artificially inflated by the defendants' fraud.

80. Each of the defendants also had the motive to commit and participate in the fraud because P-Com's revenues were the focus of securities analysts' reports. Analysts employed by securities firms prepare written reports and make recommendations about public companies such as P-Com. P-Com has been followed by numerous securities analysts employed by many firms which issued reports concerning P-Com.

81. Certain of P-Com's senior officers communicated regularly with securities analysts, including regularly scheduled conference calls which were available to any analyst and institutional investor who wished to participate, about P-Com's business, operations and financial results.

82. Because P-Com was in a highly competitive industry which was closely followed by securities analysts, its stock price was particularly sensitive to the defendants' and analysts' statements regarding P-Com's revenues, future prospects, business and profits.

83. While defendants were issuing the materially false and misleading statements alleged throughout the Complaint, certain individual defendants were taking advantage of their knowledge of the adverse facts not disclosed to the public until the end of the Class period. The extent of defendants trades, the timing of their trades and the nature of their trading habits all establish that defendants had possession of the material adverse facts alleged herein. Specifically, the Individual Defendants sold more than 270,000 shares of the P-Com stock they owned for proceeds of over $13.1 million. The Individual Defendants sold the following amounts of P-Com's shares at artificially inflated prices throughout the Class Period while in possession of material non-public information that was not disclosed to the investment community at the time of such transaction:

84. P-Com also benefitted handsomely from the artificial inflation in the price of P-Com's common stock. P-Com raised $100 million by selling convertible bonds and by using P-Com's inflated stock as a currency to complete three acquisitions for stock valued at $42 million, which enabled P-Com to diversify away from P-Com's core point-to-point radio business, which was experiencing a declining rate of growth and severe price competition.

85. The statutory safe harbor providing for forward-looking statements under certain circumstances does not apply to any of the false forward-looking statements pleaded in this Complaint. None of the forward-looking statements pleaded herein were sufficiently identified as a "forward-looking statement" when made. Nor did meaningful cautionary statements identifying important factors that could cause actual results to differ materially from that in the forward-looking statements accompany those statements. To the extent that the statutory safe harbor does apply to any forward-looking statements pleaded, the defendants are liable for those false forward-looking statements because at the time each of those statements was made, the speaker actually knew the forward-looking statement was false and the forward-looking statement was authorized and/or approved by an executive officer of P-Com who actually knew that those statements were false when made.

86. In order to inflate the price of P-Com's stock, defendants caused the Company to falsely report its results for in 1997 and 1Q98. Defendants did this by improperly recognizing revenue and failing to adequately accrue for excess and obsolete inventory thereby materially overstating its revenue, net income and EPS in 1997 and 1Q98.

87. P-Com reported the following amounts for interim periods during F97;

88. P-Com included its interim 1997 and 1998 results in Form 10-Q's which filed with it the SEC. With regard to the financial information included in the Form 10-Q's, P-Com represented:

In the opinion of management, the accompanying unaudited condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of P-Com, Inc.'s (referred to herein together with its wholly-owned and partially-owned subsidiaries, as "P-Com" or the "Company") financial condition as of (periods presented), and the results of its operations, and its cash flows for the six month periods ended (periods presented).

89. These representations were false and misleading when made, as P-Com's financial statements for 1997 and IQ98 did not present fairly P-Com's results and which results were presented in violation of GAAP and SEC rules.

90. GAAP are those principles recognized by the accounting profession as the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. SEC Regulation S-X (17 C.F.R. S210.4-01(a) (1)) states that financial statements filed with the SEC which are not prepared in compliance with GAAP are presumed to be misleading and inaccurate, despite footnote or other disclosure. Regulation S-X requires that interim financial statements must also comply with GAAP, with the exception that interim financial statements need not include disclosure, which would be duplicative of disclosures accompanying annual financial statements. 17 C.F.R. S210.10-01(a).

91. The Individual Defendants caused P-Com to falsify its reported financial results through its improper revenue recognition on P-Com's shipments of its products to customers, including Advanced Radio, while granting to the customers an unconditional right to return unused product. Pursuant to GAAP, P-Com should have deferred recognition of revenue on such shipments until the product was used (or there was an unconditional commitment to buy it by the customers), but did not in order to inflate its reported results. Moreover, pursuant to GAAP, P-Com was required to adequately accrue losses for excess and obsolete inventory, but did not in order to report growing EPS during the class Period.

92. GAAP, as set forth in FASB Statement of Accounting Standard ("SFAS") No. 48, Revenue Recognition When Right of Return Exists, prohibits the recognition of revenue when the right of return exists unless certain conditions are met. SFAS No. 48 applies to transactions "in which a product may be returned, whether as a matter of contract or as a matter of existing practice." SFAS No. 48, ¶3. SFAS No. 48, ¶6 states:

6. If an enterprise sells its product but gives the buyer the right to return the product, revenue from the sales transaction shall be recognized at time of sale only if all of the following conditions are met:

a The seller's price to the buyer is substantially fixed or determinable at the date of sale.

b. The buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product.

93. GAAP, as set forth in Accounting Research Bulletin ("ARB") No. 43, Inventory, requires that the where the value of inventory declines below cost, the difference between cost and value (whether due to obsolescence, price changes or other causes) be accrued as a loss in the period it becomes evident. ARB No. 43, Statement No. 5.

94. Despite granting the right to return unused product to its customers, P-Com improperly recognized at least $5 million in revenue during the first three quarters of 1997 and failed to adequately accrue losses for excess and obsolete inventory in 1997 and 1Q98 in order to inflate its reported results, contrary to GAAP. Even as P-Com's inventory balance grew disproportionately to sales, P-Com failed to take adequate reserves to reflect the excess and obsolete inventory the Company was accumulating. The Company's inventory turnover declined from one time per quarter at the beginning of the Class Period to less than .6 times per quarter by 1Q98.

95. Ultimately, in the quarter ended September 30, 1998, P-Com will have to write-down its inventories by millions of dollars, and its sales will be much weaker than in prior quarters, partly due to the improper revenue recognition practices of prior quarters. Absent the Company's accounting shenanigans, P-Com would have reported materially lower earnings than it actually reported in 1997, at least $1 million lower in the first two quarters of 1997, at least $1 million lower in 3Q97 and at least $2 million lower and $2.5 million lower in 4Q97 and 1Q98, respectively.

96. Due to these accounting improprieties, the Company presented its financial results and statements in a manner which violated GAAP, including the following fundamental accounting principles:

(a) The principle that interim financial reporting should be based upon the same accounting principles and practices used to prepare annual financial statements (APB No. 28, ¶10);

(b) The principle that financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit and similar decisions was violated (FASB Statement of Concepts No. 1, ¶34);

(c) The principle that financial reporting should provide information about the economic resources of an enterprise, the claims to those resources, and effects of transactions, events and circumstances that change resources and claims to those resources was violated (FASB Statement of Concepts No. 1, ¶40);

(d) The principle that financial reporting should provide information about how management of an enterprise has discharged its stewardship responsibility to owners (stockholders) for the use of enterprise resources entrusted to it was violated. To the extent that management offers securities of the enterprise to the public, it voluntarily accepts wider responsibilities for accountability to prospective investors and to the public in general (FASB Statement of Concepts No. 1, ¶50);

(e) The principle that financial reporting should provide information about an enterprise's financial performance during a period was violated. Investors and creditors often use information about the past to help in assessing the prospects of an enterprise. Thus, although investment and credit decisions reflect investors' expectations about future enterprise performance, those expectations are commonly based at least partly on evaluations of past enterprise performance (FASB Statement of Concepts No. 1, ¶42) ;

(f) The principle that financial reporting should be reliable in that it represents what it purports to represent was violated. That information should be reliable as well as relevant is a notion that is central to accounting (FASB Statement of Concepts No. 2, ¶¶58-59);

(g) The principle of completeness, which means that nothing is left out of the information that may be necessary to insure that it validly represents underlying events and conditions was violated (FASB Statement of Concepts No. 2, ¶79) ; and

(h) The principle that conservatism be used as a prudent reaction to uncertainty to try to ensure that uncertainties and risks inherent in business situations are adequately considered was violated. The best way to avoid injury to investors is to try to ensure that what is reported represents what it purports to represent (FASB Statement of Concepts No. 2, ¶¶95, 97).

97. Further, the undisclosed adverse information concealed by defendants during the Cass Period is the type of information which, because of SEC regulations, regulations of the national stock exchanges and customary business practice, is expected by investors and securities analysts to be disclosed and is known by corporate officials and their legal and financial advisors to be the type of information which is expected to be and must be disclosed.

98. Plaintiff incorporates by reference all preceding paragraphs of the Complaint as if fully set forth herein.

99. During the Class Period, defendants, and each of them, carried out a plan, scheme and course of conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing public, including plaintiff and the other class members, as alleged herein; (ii) artificially inflate and maintain the market price of P-Com securities; and (iii) cause plaintiff and other members of the Class to purchase P-Com securities at inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set forth herein.

100. Defendants (a) employed devices, schemes, and artifices to defraud; (b) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (c) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company's stock in an effort to maintain artificially high market prices for P-Com's securities in violation of section 10(b) of the Exchange Act and Rule 10b-5.

101. The statements made by defendants during the Class Period were materially false and misleading because at the time they were made, the Company and persons acting as corporate officers knew or recklessly ignored, but failed to disclose, the matters set forth herein.

102. In ignorance of the artificially high market prices of P-Com's publicly traded securities, and relying directly on defendants or indirectly on the false and misleading statements made by defendants, upon the integrity of the market in which the securities trade, on the integrity of the regulatory process and the truth of any representations made to appropriate agencies at the time of the public offering and/or on the absence of material adverse information that was known to defendants but not disclosed in public statements by defendants during the Class Period, plaintiff and the other members of the Class acquired P-Com securities during the Class Period at artificially high prices and were damaged thereby.

103. Had plaintiff and the other members of the Class and the marketplace known the truth about the true financial condition and business prospects of P-Com, which were not timely disclosed by defendants, plaintiff and other members of the Class would not have purchased or otherwise acquired their P-Com securities during the Class Period, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices which they paid. Hence, plaintiff and the Class were damaged by defendants' violations of Section 10(b) and Rule 10b-5.

104. As a direct and proximate result of defendants' wrongful conduct, plaintiff and the other members of the Class, suffered damages in connection with their purchases of the P-Com securities during the Class Period.

105. Plaintiff incorporates by reference all preceding paragraphs of the Complaint as if fully set forth herein.

106. Defendants Roberts, Antoniucci, Sophie, Bean, Wood, Cogan and Hawkins acted as controlling persons of P-Com within the meaning of §20 of the Exchange Act. By reason of their respective positions, they had the power and authority to cause P-Com to engage in the wrongful conduct complained of herein.

107. By reason of such wrongful conduct, defendants are liable pursuant to §20 (a) of the Exchange Act. As a direct and proximate result of the defendants' wrongful conduct, plaintiff and the other members of the Class suffered damages in connection with their purchases of P-Com common stock during the Class Period.

WHEREFORE, plaintiff prays for relief and judgment, as follows:

1. Determining that this action is a proper class action, certifying plaintiff as class representatives under Rule 23 of the Federal Rules of Civil Procedure and their counsel as class counsel;

2. Awarding compensatory damages in favor of plaintiff and the other class members against all defendants, jointly and severally, for all damages sustained as a result of the defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

3. Awarding plaintiff and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and

4. Awarding such other and further relief as this Court may deem just and proper including any extraordinary equitable relief and/or injunctive relief as permitted by law or equity to attach, impound or otherwise restrict the defendants' assets to assure plaintiff and the members of the Class have an effective remedy.

Plaintiff hereby demands a trial by jury.