Court throws out lawsuit against Intel

By : |July 29, 2003 0

SAN FRANCISCO: A U.S. federal court dismissed a securities fraud lawsuit against Intel Corp. filed by shareholders after the chipmaker’s stock price fell more than 40 percent in one month in 2000.

The lawsuit, led by the Hawaii Reinforcing Iron Workers Pension Trust Fund, accused Intel executives of making false and misleading statements about quarterly revenue projections and products that artificially inflated the stock price.

The U.S. District Court in San Jose, California, granted Intel’s motion to dismiss the lawsuit, saying there was no evidence that Intel executives knew statements about products and demand were false.

In addition, the court ruled that language used by the company cautioning that the projections were forward-looking shielded Intel from liability.

The lawsuit had maintained Intel should be held liable for statements made by investment analysts who provided optimistic guidance to investors, but the court disagreed.

“We are gratified the judge agreed with Intel that there was no intent on the part of Intel to mislead or defraud investors,” said Intel spokesman Chuck Mulloy.

“The worldwide economy had begun slowing significantly in the third quarter of 2000 and our results for that quarter, while there was growth, reflected slower growth and that in turn was a reflection of the overall economy,” he added.

Lawyers representing the shareholders did not immediately return phone calls seeking comment.

Intel’s stock, which hit an all-time high of $76 on Aug. 28, 2000, dropped from over $61 to $46.50 on Sept. 22, 2000, the largest one-day trading volume of any stock in history, according to the court ruling. By Sept. 29, 2000, it was trading at below $42.

The lawsuit stems from events that took place between July and October 2000. In July 2000, Intel projected that revenue for the third quarter would be up from the second quarter, and announced a new 1.13 gigahertz speed Pentium III chip.

In August 2000, Intel reiterated the forecast and said there was strong demand for the new chip, but later that month said it was recalling and halting sales of the chip because of a defective design.

In early September 2000, Intel reaffirmed its forecast. Then on Sept. 21 it said third-quarter revenue would be lower than expected, citing weak demand in Europe. A week later, Intel said it was delaying shipment of its Pentium IV chip and canceling a new chip, code-named Timna, due to technical development problems and lack of demand.

The court dismissed the lawsuit in October 2002 but allowed the shareholders to file an amended complaint with additional allegations and information.

© Reuters

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