On January 19, 2007 the judge entered his final order dismissing the first and second claims against the defendants with prejudice, but dismissing the third claim without prejudice. The plaintiffs, however, have chosen not to pursue the case and the case was administratively closed on February 9, 2007.
According to the Company’s FORM 10-Q For the Quarterly Period Ended June 30, 2006, the defendants filed an amended motion to dismiss the case on February 6, 2006. Plaintiffs filed their opposition on April 24, 2006, and defendant’s reply was filed on June 14, 2006.
As disclosed by the same SEC filing, in December 2004 and January 2005, the Company and certain current and former officers and directors were named as defendants in several complaints seeking monetary damages filed on behalf of all persons who purchased Company common stock during a specified class period. These suits were filed in the U.S. District Court of New Jersey (New Jersey cases) and the U.S. District Court for the Central District of California (California cases), alleging that the defendants violated the Securities Exchange Act of 1934 by allegedly disseminating materially false and misleading statements and/or concealing material adverse facts. The California cases were consolidated with the New Jersey cases so that all of the class action suits, now known as Witriol v. Conexant, et al. (Witriol), are being heard in the U.S. District Court of New Jersey by the same judge. The defendants believe these charges are without merit and intend to vigorously defend the litigation. On September 1, 2005, the defendants filed their motion to dismiss the case. On November 23, 2005, the court granted the plaintiff’s motion to file a second amended complaint, which was filed on December 5, 2005.
The original complaint alleges that Conexant violated federal securities laws by issuing false or misleading statements concerning its integration with Globespan. More specifically, the complaint alleges that on March 1, 2004, Conexant acquired Globespan. Conexant claimed, "We have made outstanding progress toward integrating the organizations, systems, technologies and processes of Conexant and GlobespanVirata over the past two months and are in a strong position as we begin combined operations today." However, the merger had not been successful, as was later admitted, and the Company faced severe problems combining the two companies' parallel DSL and wireless technology offerings. Sales and administration operations also experienced integrations problems. Conexant claimed that the growth in its wireless LAN ("WLAN") business was slowing. Integration problems also beset the Company's WLAN business, formerly the top producer for WLAN. Defendants also neglected research and development of new products, resulting in huge market share losses.
The complaint further alleges that on November 4, 2004, Conexant announced that its "fourth fiscal quarter 2004 revenues of $213.1 million decreased 20 percent from the third fiscal quarter revenues of $267.6 million." As a result of this disclosure, Conexant's stock price fell 10% on November 5, 2004. Murray, Frank & Sailer LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
Note: The complaint have been filed on behalf of all persons who purchased the publicly traded securities of Conexant Systems, Inc. between March 1, 2004 and November 4, 2004, including all former holders of GlobespanVirata, Inc. who acquired Conexant shares in the merger completed March 1, 2004.