According to the a press release dated on October 15, 2010, the complaint alleges that throughout the Class Period, defendants issued materially false and misleading statements regarding the Company’s operations and its business and financial results and outlook. According to the complaint, defendants misled investors by misrepresenting and failing to disclose material problems with SolarWinds’ license revenues and sales to the U.S. federal government, as well as material problems within the Company’s sales management team that prevented SolarWinds from accurately predicting the Company’s ability to make and maintain sales. As a result, defendants’ statements about the Company’s expected financial performance during the Class Period lacked a reasonable basis when made and SolarWinds stock traded at artificially inflated prices.
On July 21, 2010, the Company cut its recently reaffirmed and raised revenue guidance. Describing why the Company was abruptly cutting its financial forecasts, defendants revealed there had been a 44% decline in U.S. federal government sales that was caused by the inability of the Company’s “US federal sales management team to predict and positively influence” the pace of sales. On July 22, 2010, multiple analysts downgraded SolarWinds’ stock, including Jeffries & Co., Morgan Stanley, Needham & Company and Goldman Sachs. The downgrade was due to “too many explanations” and a “license miss of significant magnitude.” In response to the Company’s announcement and analyst downgrades, SolarWinds common stock plummeted 23% or $3.81 per share to close at $12.71 on July 22, 2010, on heavy trading volume.
On March 22, 2011, Judge Jorge A. Solis granted the motion to appoint Daniel Richardson as lead plaintiff, and approved the selection of lead and liaison counsel, Robbins Geller Rudman & Dowd LLP and Kendall Law Group, LLP, respectively. The Amended Complaint is due by May 2, 2011.
On May 12, 2011, the plaintiff filed a Notice of Dismissal without Prejudice. That same day, Judge Jane J. Boyle signed the Order dismissing the action without prejudice.