According to a press release dated March 10, 2009, the complaint charges Sprint and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Sprint is a global communication company offering a range of wireless and wireline communications products and services for individual consumers, businesses and government customers.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. As a result of defendants’ false statements, Sprint stock traded at artificially inflated prices during the Class Period.
In December 2004, Sprint Corporation and Nextel Communications (“Nextel”) announced that they would merge. The merger was completed on August 12, 2005, with Sprint Corporation buying Nextel for $37.8 billion. The merger, the complaint alleges, turned out to be a disaster, as the Company has had difficulties in combining the resources of the two companies due to culture clashes and technological issues. However, during the Class Period, defendants repeatedly assured the market that the Company was poised for a turnaround and was focused on improving its core operations.
As late as the summer of 2007, defendants continued to play down and conceal Sprint’s problems with its network and with its customer service issues and subscriber base. Beginning in early Fall 2007, Sprint finally began to acknowledge that its initiatives were not working and that the Company was experiencing a serious deterioration in its subscriber base, due both to a slow down in new growth and a massive defection of its current subscribers to its competitors.
On February 28, 2008, before the market opened, the Company reported disappointing fourth quarter and full year 2007 financial results, including a net loss for the quarter of $29.5 billion or $10.36 diluted loss per share. On this news, Sprint’s stock collapsed $0.86 per share to close at $8.09 per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company’s CDMA business was not as healthy as represented; (b) the Company would be unable to complete its migration of its entire customer base to a uniform billing platform by 2007 from the multiple legacy platforms, thus continuing to cause customer service problems and having a negative effect on the Company’s voluntary churn rate; (c) the Company had not taken the proper steps to address its customer service issues; (d) the Company failed to disclose known trends and uncertainties as required by SEC regulations concerning the loosening of its credit standards for its CDMA network and its failure to take the proper steps to address customer service issues, which would have a negative effect on the Company’s operations in the future; (e) the Company was not adequately reserving for its impaired goodwill associated with Nextel or its allowance for bad debts related to subprime subscribers in violation of GAAP, causing its financial results to be materially misstated; (f) the Company had far greater exposure to liquidity concerns and ratings downgrades than it had previously disclosed; (g) the Company was failing to integrate the CDMA network and the iDEN network; and (h) given the increased volatility in the subprime market, the intense competition in the wireless industry and the problems facing Sprint due to its failure to integrate legacy Sprint and legacy Nextel operations, the Company’s projections issued during the Class Period about its earnings for 2007 and 2008 were at a minimum reckless. As a result of defendants’ false statements, Sprint’s stock traded at inflated levels during the Class Period. However, after the above revelations seeped into the market, the Company’s shares fell more than 65% from their Class Period high.
On June 06, 2009, a consolidated complaint was filed by the lead plaintiffs against the defendants in this action.
On August 11, 2009, an Order Appointing Lead Plaintiffs and Approving Lead Plaintiffs’ Selection Of Counsel was issued by the Court.
On January 6, 2011, the Court issued an Order denying the Defendant's motion to dismiss; holding that the Plaintiffs met the pleading standards under the PSLRA alleging numerous false and misleading statements.
On February 23, 2011, the Court issued an Order denying the Defendant's Interlocutory Appeal of the Court's decision to deny the motion to dismiss.
On March 27, 2014, the Court issued an Order granting Plaintiffs' Motion to Certify Class.
On March 26, 2015, the parties entered into a Stipulation of Settlement. The Settlement was granted final approval on August 12, and this case was dismissed with prejudice.