MANHASSET, N.Y. Shareholders of Conexant Systems Inc. have filed a class-action suit against the company in the United States District Court for the District of New Jersey, claiming the communications semiconductor supplier failed to fully inform them about the company's deteriorating financial condition.
The suit was filed by law firm Milberg Weiss Bershad& Schulman LLP on the behalf of shareholders purchasing stock between March 1, 2004 and November 4, 2004, with the defendants being Conexant's chairman and chief executive Dwight Decker, former chief executive Armando Geday, and chief accounting officer J. Scott Blouin.
The complaint alleges that when Conexant (Newport Beach, Calif.) announced results for its fourth fiscal 2004 quarter ended Nov. 4, 2004, Geday's response to an analyst's question concerning the company's inventory glut during a conference call caused the company's stock to tumble from $1.76 to $1.60 per share between November 4 and 5.
Conexant's shareholders allege that the company failed to fully inform them of its inventory problems as well as serious operating problems related to its earlier acquisition of Globespan's wireless LAN division.
The suit is of little comfort to a company having difficulty righting its course.
Earlier this month, Conexant lowered
its December fiscal quarter guidance to $140 million from $175 million to $185 million projected previously, as the company said it would write off $50 million in inventory.
Conexant's financial problems led to a major management shakeup in early November. Decker replaced Geday as chief executive, returning to a post he held from January 1999 through February 2004. Decker then proceeded to replace a number of executives in an attempt to reverse Conexant's sagging fortunes.