Salesforce.com, Inc. Summary: On October 22, 2006 the United States Court of Appeals entered an order for voluntary dismissal, closing the case against Salesforce.com
According to the Company’s FORM 10-Q for the quarterly period ended April 30, 2006, on January 23, 2006, lead plaintiff filed a motion for leave to file a motion for reconsideration, as well as a notice of appeal to the United States Court of Appeals for the Ninth Circuit. On January 26, 2006, the Ninth Circuit entered a time schedule order for the appeal, requiring, inter alia, lead plaintiff to file his opening brief on May 11, 2006, and defendants to file their responsive brief on June 12, 2006. On January 27, 2006, defendants filed a motion to strike as untimely lead plaintiff’s motion for leave to file a motion for reconsideration. On February 2, 2006, lead plaintiff filed a motion with the Ninth Circuit requesting a stay of the appellate proceedings pending the district court’s determination of lead plaintiff’s motion for leave and defendants’ motion to strike. Defendants opposed that motion. On February 9, 2006, the Ninth Circuit denied the lead plaintiff’s motion for a stay of the appellate proceedings, without prejudice to making a motion for limited remand. On March 1, 2006, the district court denied the lead plaintiff’s motion for leave to file a motion for reconsideration and defendants’ motion to strike on grounds of lack of jurisdiction. Also on March 1, 2006, the lead plaintiff filed a motion with the district court seeking certification for limited remand from the Ninth Circuit. Defendants opposed this motion, which was denied by the district court on April 3, 2006. On May 2, 2006, the Ninth Circuit granted lead plaintiff’s request for an extension of time to file his opening brief. Lead plaintiff’s opening brief is now due on May 25, 2006 and defendants’ response is due June 26, 2006.
In a press release dated December 23, 2005, Salesforce.com (NYSE: CRM), the technology and market leader in on-demand customer relationship management (CRM), today announced that on December 22, 2005 a purported securities class action suit, In re salesforce.com, Inc. Securities Litigation, Case No. C-04-3009 JSW (N.D. Cal.) was dismissed with prejudice by federal court in the Northern District of California. The action was originally filed in July 2004.
The original complaint charges salesforce.com and certain of its officers and directors with violations of the Securities Exchange Act of 1934. salesforce.com is engaged in the provision of on-demand customer relationship management (“CRM”) solutions. The Company delivers integrated and scalable enterprise applications for companies of all sizes.
Specifically, the complaint alleges that the Company went public on June 21, 2004 in one of the “hottest” initial public offerings (“IPO”) of 2004, with its price increasing to $17.20 on the first day of trading from the offering price of $11.00 per share. This offering had been delayed due to an interview salesforce.com’s CEO had given to The New York Times entitled “It’s Not Google. It’s That Other Big I.P.O.” While salesforce.com delayed the IPO after this article, it did not retract statements in the article. Nor did it tell investors that salesforce.com management was expecting earnings to decline in FY2005. Then, on July 21, 2004, salesforce.com disclosed that FY2005 would be much worse than market expectations. On this news, the Company’s stock price declined to as low as $11.05 per share from the prior day close of $16.06.
The complaint further alleges that defendants knew but concealed from the investing public during the Class Period that: (i) in the Company’s Prospectus, there was a clear trend in the Company’s diluted (and basic) earnings per share which defendants knew investors would price into the Company’s IPO price; and (ii) secretly defendants actually knew that this upward trend in diluted EPS had reversed itself long before the IPO. As a result of the defendants’ false statements, salesforce.com’s stock traded at inflated prices during the Class Period, increasing to as high as $17.20 per share shortly after the Company sold more than $117 million worth of its own shares via a false and defective Registration Statement.
SIC Code: 7372
Industry: Software & Programming
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