PHILADELPHIA, April 19, 2001 (PRIMEZONE) -- The law firm of Spector, Roseman & Kodroff, P.C. announces that a class action lawsuit has been commenced in the United States District Court for the Northern District of California against defendant Turnstone Systems, Inc. ("Turnstone" or the "Company") (Nasdaq:TSTN), and certain of its officers and directors, on behalf of purchasers of the stock of Turnstone during the period from June 5, 2000 through January 2, 2001, inclusive (the "Class Period"), including those who acquired their shares in connection with Turnstone's secondary offering on September 26, 2000.
The complaint charges Turnstone and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Turnstone is a provider of technology for the digital subscriber line ("DSL") service industry. Turnstone's first and primary product, the Copper CrossConnect CX100, enables telephone access providers to remotely evaluate, manage, and control the DSL connections within the telephone routing system, permitting identification of copper lines which are suitable for DSL and making installation and maintenance of DSL on those lines cheaper and easier. Turnstone's customer base consists almost entirely of Competitive Local Exchange Carriers, or "CLECs."
The complaint alleges that contrary to defendants' representations during the Class Period, Turnstone's CX100 product was fraught with problems, including blown capacitors, malfunctioning chips, and inaccurate calibration of the CX100. As a result, and contrary to the representations in the Registration Statement/Prospectus, the CX100 product was unreliable, inaccurate and inefficient in deploying DSL services to Turnstone's customers. Moreover, Turnstone's key customers were returning the product as a result of the malfunctioning of the CX100.
After the market closed on January 2, 2001, Turnstone issued another press release warning investors that its 4thQ '00 revenue would be "substantially below" market estimates because its CLEC customers had cancelled and reduced their orders. As a result, the Company announced revenue of $26 million to $28 million for the 4thQ '00, 37% lower than consensus market analyst estimates. In the same press release, the Company also disclosed that it expected to take a $13.0 to $15.5 million charge to increase its inventory reserves and bad debt reserves, thus causing Turnstone to forecast an operating loss of $12 million to $14 million for the quarter.
If you purchased Turnstone securities during the Class Period, you may, no later than May 29, 2001, move to be appointed as a Lead Plaintiff in this class action. A Lead Plaintiff is a representative, chosen by the Court, that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in Turnstone securities during the Class Period, please contact Spector, Roseman & Kodroff, P.C. at classaction@spectorandroseman.com for a more thorough explanation of the Lead Plaintiff selection process. If you have relatively small losses, your ability to participate in any recovery will be protected by the Lead Plaintiff(s), and you need take no affirmative steps at this time.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel Robert M. Roseman toll-free at 888-844-5862 or via E-mail at classaction@spectorandroseman.com. For more detailed information about the firm please visit its Website at http://www.spectorandroseman.com.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania and San Diego, California, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.