NEW YORK, Oct. 11, 2002 (PRIMEZONE) -- The law firm of Abbey Gardy, LLP has filed a class action against Electronic Data Systems (EDS" or the "Company") (NYSE:EDS) in the United States District Court for the Eastern District of Texas, on behalf of all persons or entities who purchased securities during the period from April 22, 2002 and September 24, 2002, inclusive (the "Class Period"). The suit names the Company, its Chairman and Chief Executive Officer Richard H. Brown, it Vice Chairman Paul Chiapparone and its Chief Financial Officer James E. Daley as defendants.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period thereby artificially inflating the price of EDS securities. The complaint alleges that defendants failed to disclose that the revenue from EDS's Information Solutions IT outsourcing business is highly susceptible to interruption due to terms in EDS's service contracts that enable EDS customers to unilaterally suspend discretionary spending on IT outsourcing. The Complaint alleges that defendants affirmatively misrepresented the predictability of EDS's future cash flows by touting the anticipated revenue that EDS would supposedly receive from its IT outsourcing service contracts with customers without disclosing that payments under such contracts were not guaranteed. The Complaint further alleges that defendants failed to disclose that EDS faced significant potential threats to its liquidity if its share price fell because of put-option and other obligations that ultimately obligated EDS to in effect buy back a total of 5.44 million shares of EDS stock at fixed prices averaging over $60.00 per share.
On September 18, 2002 after executives of EDS warned that a lack of new revenues would wipe out more than $0.60 per share of its Q3 earnings target of $0.74, the price of EDS stock plummeted to a 52-week low of $20, down from a class period high of $72.45. The complaint alleges that after further revelations regarding EDS's put-option and other liabilities emerged in the wake of the foregoing disclosures, EDS's share price tumbled even further to close at $11.68 on September 24, 2002.
Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired EDS securities during the Class Period. If you purchased or otherwise acquired EDS securities during the Class Period, and either lost money on the transaction or still hold the securities, you may wish to join in the action to serve as lead plaintiff. If you purchased EDS securities during the Class Period, you may, no later than November 25, 2002, request that the Court appoint you as lead plaintiff.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiffs.'' Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
Abbey Gardy, LLP has been retained as one of the law firms to represent the Class. The attorneys at Abbey Gardy, LLP have extensive experience in securities class action cases, and have played lead roles in major cases resulting in the recovery of hundreds of millions of dollars to investors. If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential class member or lead plaintiff, you may contact Nancy Kaboolian, Esq. of Abbey Gardy, LLP at (800) 889-3701 or email Nkaboolian@abbeygardy.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.