Compellent fights suit
Storage vendor dismisses legal claims it misled investors about its finanical status
Compellent has vowed to "virgorously" defend itself against the allegations
Claims made by several US legal firms that Compellent Technologies withheld information from investors have been dismissed as being “without merit.”
The storage vendor has been rocked in recent weeks by several US law firms announcing class action lawsuits against it on behalf of those who purchased shares in the company between 28 October 2009 and 7 April 2010
The law firms are claiming that Compellent failed to disclose “adverse facts” relating to the company’s “true financial condition”.
For example, it is accused of not making investors aware that increased competition and problems with its internal sales force were causing sales to slow.
As a result, Compellent “lacked a reasonable basis” for the positive statements it made about its prospects and growth, the firms claims, which were not reflected by Compellent's preliminary first quarter results.
When Compellent published its preliminary first quarter results on April 7, the company said it expected revenues to be somewhere in the region of $31.5 to $32m.
This was down on earlier predictions made by the company back in February when it estimated that its first quarter revenues would be between $35 and $37m.
All three legal firms labelled April's announcement, which led to the company’s share price falling by $4.54 to $13.02 at the close of trade, as “disappointing”.
Liem Nguyen, director of corporate communications at Compellent, said it was not uncommon for legal firms to court investors when a firm posts results that are viewed as disappointing and would be fighting to clear its name.
“The allegations are without merit and the company intends to vigorously defend itself against them,” he said.
“In the meantime, the focus remains on executing our business strategy and delivering world-class storage products to end users through the channel.”