NEW YORK, May 3, 2005 (PRIMEZONE) -- Investors are advised that have until June 7, 2005 to seek appointment by the Court as one of the lead plaintiffs in the class action lawsuit filed by Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) on behalf of purchasers of WatchGuard Technologies, Inc.("WatchGuard" or the "Company") (NASDAQ:WGRD) securities during the period from February 12, 2004 to March 15, 2005, inclusive (the "Class Period"). The lawsuit was filed on April 19, 2005 in the United States District Court, Western District of Washington.
The complaint alleges that WatchGuard and certain of its officers and directors knowingly or recklessly misrepresented the Company's earnings throughout the Class Period, and thereby caused the Company's stock price to trade at artificially inflated prices in violation of the Securities Exchange Act of 1934.
The true facts, which were known to each of the defendants but concealed from the investing public, were that (a) WatchGuard's Q1-Q3 2004 reported financial results were materially false and misleading due to (i) inaccurate income statement classification of early pay incentive discounts taken by customers; (ii) under-accrual of customer rebate obligations; and (iii) timing of revenue recognition associated with specific products and services (resulting from an overstatement of product revenue and understatement of deferred revenue); (b) the Company's February 12, 2004 projections were materially false and misleading; (c) The functionality and value of the Company's "Firebox X" product was grossly overstated, and this product did not materially or accurately improve the Company's gross margins, streamline the Company's management or otherwise reduce its reliance on custom components; and (d) contrary to defendants' statements, the Firebox X was not tracking as defendants claimed.
On March 16, 2005, WatchGuard disclosed that (1) certain errors were discovered in its audit process and that it would need to reclassify early pay incentive discounts from interest expense to reduce its revenue for its previous financial results for 2002, 2003 and the first three quarters of 2004; (2) an error was discovered in the Company's handling of lease incentives; and (3) the errors reflected a material weakness in the Company's internal controls over financial reporting.
The market reacted swiftly to this disclosure, with the Company's stock price falling to a closing price of $3.17 on March 16, 2005.
A lead plaintiff acts on behalf of other class members in overseeing and directing the litigation. The Court must determine that the claim of the lead plaintiff is typical of the claims of other class members, and that lead plaintiff will adequately represent the class. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) or Teresa L. Webb (tlwebb@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. For more information about the Firm, visit our web site at www.pomlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.