Mentor Graphics Corp.
Robbins Arroyo LLP: Mentor Graphics Corporation (MENT) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Mentor Graphics Corporation (NASDAQGS: MENT) in the U.S. District Court for the District of Oregon, Portland Division. The plaintiff brings the complaint on behalf of all purchasers of Mentor Graphics securities between August 21, 2014 and November 19, 2015, for alleged violations of the Securities Exchange Act of 1934 by Mentor Graphics’ officers and directors. Mentor Graphics provides electronic design automation software and hardware solutions to automate the design, analysis, and testing of electro-mechanical systems, electronic hardware, and embedded systems software.
Mentor Graphics Accused of Misrepresenting the Company’s Financial Condition
According to the complaint, during the Class Period, Mentor Graphics claimed to have substantial visibility into its future financial results, including revenue and earnings per share, long before the end of any fiscal year. In particular, the company claimed that its long term contracts, significant backlog of orders, and cyclical business allowed it to make such predictions. Mentor Graphics officials also emphasized that demand for its emulation and other products was robust and growing, and that it was currently leveraging that demand to sign customers to long-term contracts. The company further assured investors that its differentiated product offerings insulated it from competitive pricing pressures. On August 20, 2015, Mentor Graphics reported record financials for the second quarter of 2016, noting that customer need for increased amounts of software drove early renewal activity and the upside in the quarter.
The complaint alleges that Mentor Graphics’ above representations were misleading because the company failed to disclose that its customers were delaying or declining extended license agreements or demanding price concessions from the company. In addition, demand for Mentor Graphics’ emulation products slowed due to the anticipated introduction of competitive products, and early contract renewals and related bookings moved expected bookings and revenue from future periods to earlier periods and were not a sign that demand was strong and increasing. Between October 9 and October 12, 2015, Mentor Graphics’ Chief Executive Officer sold 170,000 shares of Mentor Graphics stock at prices above $25 per share for proceeds of more than $4.3 million. Then, on November 19, 2015, Mentor issued a press release announcing disappointing financial results for the third quarter of 2016 and substantially reducing its fourth quarter 2016 outlook. On November 20, 2015, Mentor stock fell by $9.93 per share, or 36%, closing at $17.85 per share.
Mentor Graphics 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.