SAN DIEGO -- Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/ciscosystems/) today announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Cisco Systems, Inc. ("Cisco") (NASDAQ:CSCO) common stock during the period between May 12, 2010 and February 9, 2011 (the "Class Period").
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Darren J. Robbins or Samuel H. Rudman of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at djr@rgrdlaw.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/ciscosystems/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint charges Cisco and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Cisco designs, manufactures, and sells internet protocol based networking and other products related to the communications and information technology industry and provides services related to their use worldwide.
The complaint alleges that, throughout the Class Period, defendants failed to disclose material adverse facts about the Company's true financial condition, business and prospects. Specifically, the complaint alleges that: (a) Cisco was facing intense pricing pressure for its products from its more traditional competitors and emerging Chinese competitors; (b) in order to maintain market share and meet its previously announced growth rate targets in the face of the intense pricing pressure being exerted by the Company's competitors, Cisco was forced to dramatically lower prices, which was having a material adverse effect on the Company's margins; and (c) based on the foregoing, defendants lacked a reasonable basis for their positive statements about Cisco's growth rates, market share, orders, new product introductions and gross and operating margins.
On February 9, 2011, the Company issued a press release announcing its financial results for the 2011 fiscal second quarter, ended January 29, 2011, reporting net sales of $10.4 billion, net income on a GAAP basis of $1.5 billion or $0.27 per share, and non-GAAP net income of $2.1 billion or $0.37 per share. Cisco's CEO, John Chambers, commented on the results, stating, in part, "[t]he quarter played out as we expected." Following the 2011 fiscal second quarter earnings announcement, defendants held a conference call with analysts and investors, noting that non-GAAP gross margins were 62.4%, down 1.9% quarter-over-quarter and 3.2% year-over-year. Product related non-GAAP gross margins for the second quarter were 61.1%, down 2.9% from the prior quarter. In response to the unexpected drop in Cisco's margins, shares of the Company's stock fell $3.12 per share, or more than 14%, to close at $18.92 per share, on extremely heavy trading volume.
Plaintiff seeks to recover damages on behalf of all purchasers of Cisco common stock during the Class Period (the "Class"). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Robbins Geller, a 180-lawyer firm with offices in San Diego, San Francisco, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Robbins Geller Web site (http://www.rgrdlaw.com) has more information about the firm.
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