Synopsys Inc., which makes semiconductor-design software, announced that a class-action lawsuit brought by shareholders has been dismissed.
In August 2004, Synopsys announced preliminary results for its July 31 quarter that came in below its previous target range, according to a report at the time in Electronic News. About two weeks later, the official results fell somewhere in between, but the company warned that results for the then-current period and fiscal year would fall far short of expectations, according to the paper.
Not surprisingly, unhappy shareholders sliced off nearly one-third of the company’s market capitalization in one day of trading.
Shareholders filed a class-action lawsuit naming chairman and chief executive officer Aart J. de Geus, senior vice president and chief financial officer Steven K. Shevick, and corporate controller Richard T. Rowley. According to the Electronic News account, the lawsuit charged them with “failing to disclose and misrepresenting material adverse facts that were known to them or recklessly disregarded by them.”
When a company announces a restatement or a negative earnings surprise, large investors often file a lawsuit almost as a reflex, frequently after prodding by plaintiff law firms. Frequently these suits are settled, but not in the case of Synopsys.
“This dismissal resolves in our favor a case we believed from the beginning had no foundation,” stated de Geus, in a press release. “We are very pleased to have won our motion to dismiss and to be able to move forward without further management distraction or expense.”
Synopsys did not provide reasons for the dismissal or any further details, except for stating that each party will bear its own fees and costs.