January 25, 2001, 12:07 PM — (REUTERS)-- Foundry Networks Inc. was hit with two separate class-action lawsuits late last week accusing the networking switch and router maker of concealing negative earnings information so top executives could sell their stock before prices fell.
The San Jose-based company closed at $14-15/16 Tuesday, down 2 percent from its Friday close of $15, but far off its high of $212 in March last year.
Cauley Geller Bowman & Coates issued a statement Saturday it had also filed a class-action suit against Foundry in the United States District Court for the Northern District of California.
Foundry and its executives, "made positive but false statements about Foundry's business and future revenues during October and November 2000, artificially inflating the price of the Company's stock," said Cauley Geller in a statement.
Last Thursday, Milberg Weiss filed a similar suit against Foundry in the same US District Court.
Milberg Weiss' complaint alleges top executives sold or registered to sell a total of $113 million worth of stock during the period covered by the lawsuit, most of it before mid-November,
Foundry released a 10-Q in mid-November, "containing many new disclosures many of its customers might experience in raising money and that Foundry had provided vendor financing to fuel some of its growth," said Milberg Weiss in a statement.
"However, Foundry's stock continued to trade at artificially inflated levels as defendants continued to make public statements that demand was strong and that Foundry's biggest problem was keeping up with demand."
Both suits cover all purchasers of common stock between Oct. 18, 2000 and Dec. 19, 2000.
Foundry declined to comment, according to a spokesman.
On December 19th, Foundry said its revenue and earnings per share for the fourth quarter would not meet previous estimates, due to slowed capital spending by corporations and Internet service providers.
That caused Foundry's stock to plunge 50 percent to around $15 per share and a number of brokerages downgraded the stock.
Foundry expects fourth-quarter earnings to be 11 to 14 cents per share, below the 24 cents per share average of analysts polled by First Call/Thomson Financial.
This is the third lawsuit Foundry has been hit with in the last two months of the year. In mid-November, Foundry was sued by a former top marketing executive at Foundry for sexual harassment and discrimination.
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