On August 8, 2007 the judge entered an order granting the defendants' December 4, 2006 motion to dismiss the case. As of yet, plaintiffs have not filed an appeal to the decision.
On June 29, 2006, the Court entered the Order consolidating all the actions, designated the Laborers Pension Group as lead plaintiff and approved Lerach Coughlin Stoia Geller Rudman & Robbins, LLP, to serve as lead counsel. On September 8, 2006, the plaintiffs filed a Consolidated Amended Complaint.
The original complaint charges ATI and certain of its officers and directors with violations of the Securities Exchange Act of 1934. ATI is the world's second largest computer graphics chip maker.
Specifically, the complaint alleges that during the Class Period, defendants made false and misleading statements regarding the Company's business and prospects. As a result of defendants' false and misleading statements, ATI's stock traded at inflated levels, allowing the Company's top officers and directors to sell or otherwise dispose of more than $54 million worth of their own shares at artificially inflated prices.
The complaint alleges that the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was selling desktop and notebook products with lower and lower profit margins; (b) ATI's gross margins were being weakened by high sales of its IGP products, which have profit margins well below the corporate average; (c) the Company was earning lower-than-anticipated yields on certain products due to operational issues in its own packaging and test areas of its manufacturing process; (d) the Company was experiencing production/design/yield issues with its R520 chip; (e) the Company was losing market share to arch-rivals Nvidia Corp. and Intel Corp.; and (f) despite defendants' previous statements to the contrary, a fire at one of the Company's primary suppliers in Taiwan was preventing the Company from receiving necessary supplies.
The complaint further alleges that on or around June 6, 2005, ATI warned that its revenue for the third quarter 2005 would fall well below its previously announced forecast. Thereafter, when the Company issued its actual third quarter 2005 financial results on June 23, 2005, reporting a quarterly loss of $445,000 in the third quarter 2005 compared to a profit of $48.6 million in the third quarter 2004 and further reducing fourth quarter 2005 revenue expectations by $20-$50 million, the Company's stock price fell another 8% to its lowest point since July 2003 on extremely high volume.