NEW YORK, June 29, 2007 (PRIME NEWSWIRE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) ("Pomerantz") has filed a class action lawsuit in the United States District Court, Central District of California, against Netlist Inc. ("Netlist" or the "Company") (Nasdaq:NLST) and certain officers, on behalf of purchasers of the common stock, who purchased or otherwise acquired common stock pursuant or traceable to the Company's November 30, 2006 Initial Public Offering (the "IPO" or the "Offering") through April 16, 2007, inclusive (the "Class Period"). The complaint alleges violations of Section 11, 12 (a) (2), and 15of the Securities Exchange Act.
Netlist is headquartered in Irvine, California. The Company is a designer and manufacturer of high performance memory subsystems, which are sold to original equipment manufacturers ("OEMs") in the server, high performance computing and communications markets. The Complaint alleges that, in connection with the Company's IPO, defendants failed to disclose or indicate that, among other things, (1) the Company's growth and operational strategies were materially flawed; (2) the Company was already experiencing the effects of an oversaturated memory chip market, and that demand for the Company's products had deteriorated substantially; (3) the Company's products were not unique or well positioned in the market; (4) the Company encouraged its largest customers to order and maintain excess inventory so that the Company would appear financially stable; and (5) due to these excessive inventory levels, the Company's profit margins were quickly eroding in the memory chip market.
In particular, on November 30, 2006 the Company conducted a successful IPO, raising $43.70 million by selling 6.25 million shares of stock to the public for $7.00 per share. Pursuant to the IPO, Company insiders, were eligible to sell up to 937,500 shares of Company stock, of which they initially planned to sell 812,500 shares, or 86 percent of the available allotment. At the time of the IPO, the insiders sold all 937,500 shares, for gross proceeds of over $6.5 million. On April 16, 2007 the Company disclosed that its operating income would be dramatically lower due to an oversupplied dynamic random access memory market, which in turn affected the Company's pricing and gross margins on its products. Additionally, the Company revealed that it had experienced a lower than expected demand from its largest customers for its high-end products, due to excess inventory concerns, which had also significantly reduced demand for the Company's products. As a result of this news, shares of the Company's stock declined more than 28 percent, or $1.68 per share.
If you are a shareholder who purchased the securities of Netlist during the Class Period, you have until July 27, 2007 to ask the Court to appoint you as lead plaintiff for the class. Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may 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 Teresa L. Webb (tlwebb@pomlaw.com) or Carolyn S. Moskowitz (csmoskowitz@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 Washington, D.C. and the San Francisco Bay area, 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 70 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.
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