Extreme Networks Inc.
Robbins Arroyo LLP: Extreme Networks, Inc. (EXTR) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a securities fraud class action complaint was filed in the U.S. District Court for the Northern District of California. The complaint alleges that officers and directors of Extreme Networks, Inc. (NASDAQGS: EXTR) violated the Securities Exchange Act of 1934 between November 4, 2013 and April 9, 2015, by making materially false and misleading statements about Extreme Networks’ business prospects. Extreme Networks, together with its subsidiaries, provides wired and wireless network infrastructure equipment, software, and services for enterprises, data centers, and service providers.
Extreme Networks Misses Revenue Guidance
According to the complaint, Extreme Networks issued materially false and misleading statements regarding the company’s quarterly and year-end revenue and earnings outlook for FY15. Specifically, Extreme Networks officials assured investors that three growth drivers would allow the company to meet or exceed revenue forecasts: (i) the successful integration of its direct competitor, Enterasys Networks, Inc., after an acquisition that was touted as creating significant value for shareholders; (ii) a new partnership with Lenovo, which acquired IBM’s X86 server business and purportedly planned to bundle and sell Extreme Networks’ server products with its own; and (iii) a federal subsidy program that helps K-12 schools acquire information technology.
However, the complaint alleges that Extreme Networks failed to disclose that it had not successfully or substantially integrated Enterasys, and that its failure to integrate Enterasys’s salesforces materially impaired its ability to address persisting problems with delayed and canceled sales and costs related to inefficiently processed orders. Additionally, Extreme Networks allegedly did not disclose that Lenovo was unprepared or unwilling to begin selling Extreme Networks’ products during the timeframe or in the amounts necessary to support the company’s financial forecasts.
On April 9, 2015, Extreme Networks preannounced that it would miss guidance for the third quarter of 2015, trading in its shares had been halted, and the Company’s Chief Revenue Officer was no longer with the company. On this news, Extreme Networks’ stock fell $0.74 per share, or nearly 25%, to close at $2.50 per share on April 10, 2015.
Extreme Networks Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.