According to the law firm press release, McDermott is an engineering, procurement, construction and installation company focused on executing complex offshore oil and gas projects worldwide. McDermott operates in approximately 20 countries across the Atlantic, Middle East and Asia Pacific area. The complaint alleges that the Defendants made false and misleading statements and/or failed to disclose that: (a) the Company was experiencing weaknesses in its project bidding and execution; (b) the Company was engaging in poor risk evaluation; (c) the Company had been experiencing poor project management; (d) the Company was experiencing material losses in its Middle East, Asia Pacific and Atlantic segments; and (e) based upon the above, the Defendants lacked a reasonable basis for their positive statements about the Company during the Class Period.
On August 5, 2013, McDermott announced second quarter financial and operating results for the quarter ending June 30, 2013. In its press release, the Company disclosed that it experienced a substantial decrease in the Company’s year-over-year financial results which badly missed Wall Street consensus estimates. The Company attributed its poor performance to several significant projects in the Middle East and Asia Pacific segment along with underutilization of assets in the Company’s Atlantic segment. The Company additionally disclosed that it was taking immediate action to correct “weaknesses” in its “project bidding and execution” and management was putting in place four initiatives in order to create a “more disciplined culture within the Company” to deliver adequate return on the Company’s investors’ capital.
In reaction to the disappointing news, McDermott’s stock price fell $1.80 per share or 20.6% from $8.73 per share on August 5, 2013 to $6.93 per share on August 6, 2013, on usually heavy trading volume.
A consolidated complaint was filed on February 6, 2014.
On March 13, 2015, the Defendants' Motion to Dismiss was granted with prejudice.