PHILADELPHIA, March 7, 2001 (PRIMEZONE) -- The Olsen Law Firm filed a class action today in the United States District Court for the District of New Jersey on behalf of all persons or entities who purchased Nortel Networks Corporation (NYSE:NT) securities during the period from Nov. 1, 2000, through Feb. 15, 2001, inclusive (the "Class Period").
The complaint charges defendants with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading information that misrepresented the Company's financial condition and prospects.
On Jan. 18, 2001, Nortel issued a press release announcing outstanding fourth quarter and fiscal year 2000 results. The press release projected strong market demand in Nortel's target industry segments and stated that Nortel would achieve 30% growth in revenues and EPS in 2001, despite economic uncertainty.
The complaint alleges that defendants' guidance as to revenues and earnings for the first quarter of 2001 and full year 2001 as set forth in the Company's Jan. 18, 2001, press release was materially false and misleading because at the time they made these statements, defendants were aware that the economy in the United States had slowed down dramatically. Moreover, Nortel's customers, who are largely Internet-related companies and telecommunications companies, were suffering from severe deterioration of their businesses, so that they had and would have to drastically reduce their purchases from Nortel in the first quarter of 2001, leading to weakness in revenue and earnings growth for the remainder of 2001.
Defendants' misrepresentations caused the price of Nortel securities to be artificially inflated throughout the Class Period. Additionally, certain Company insiders took advantage of the artificially inflated prices to dump thousands of their own shares on unsuspecting investors reaping proceeds of more than $7 million.
On Feb. 15, 2001, after the close of trading, the Company stunned investors when it issued new earnings and revenue guidance to investors. Nortel slashed its projected growth rate for 2001 revenues and EPS to 15% and 10%, respectively, from the previously announced growth rate of 30%.
These disclosures caused Nortel's stock price to plummet from its Feb. 15, 2001, closing price of $29.75 to as low as $19.50 on Feb. 16, 2001, wiping out more than $33 billion in market capitalization.
The lawsuit seeks to recover losses suffered by individual and institutional investors who purchased the Company's securities during the Class Period at artificially inflated prices.
If you purchased Nortel Networks Corporation securities during the Class Period, you may, no later than April 17, 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 Nortel Networks Corporation securities during the Class Period, please contact The Olsen Law Firm 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.
The Olsen Law Firm has been appointed lead counsel in numerous important actions on behalf of defrauded investors including most recently actions against SmarTalk Teleservices, Inc., PHP Healthcare Inc., Miller Industries and Ashworth, Inc. The Olsen Law Firm focuses on uncovering complex accounting fraud.
If you purchased Nortel Networks Corporation securities and have any questions concerning this notice or your rights with respect to this matter, please contact:
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca