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QLogic (QLGC) Securities Fraud Class Action Lawsuit

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     This complaint is regarding a securities fraud class action against QLogic Corporation, a leading supplier of high performance network infrastructure solutions, for allegations of materially misleading the investing public by inflating the price of QLogic’s common stock and publicly issuing false and misleading statements, which failed to disclose material adverse information and misrepresented the truth about QLogic’s business, operations, and prospects.

Who Is Affected?

     This federal securities fraud class action is brought on behalf of a class consisting of all purchasers of QLogic’s securities between April 30, 2015 and July 30, 2015, inclusive, seeking to pursue remedies under the Exchange Act of 1934.  QLogic designs and supplies server and storage networking infrastructure products that provide, enhance, and manage computer data communication facilitating transfer of data and enable resource sharing between servers, networks, and storage.  QLogic is incorporated in Delaware with its principal place of business located in Aliso Viejo, California.  Its shares trade on NASDAQ under the ticker symbol “QLGC.”

Procedural History

     This class action lawsuit was filed on September 28, 2015 and is captioned Phyllis Hull et al. v. QLogic Corporation, et al.  It was filed in the California Central District Court and the civil docket number is 2:15-cv-07617.  The class period runs from April 30, 2015 through July 30, 2015, inclusive.

     On July 9, 2015, QLogic issued a press release reporting a preliminary net revenue of approximately $113 million for the first quarter of 2016, which is roughly $20 million below the forcasted range of $124 to $132 million.  QLogic revealed that its financial results have been negatively impacted by lower than expected demand due to general weakness in its traditional enterprise server and storage markets, and a build-up of inventory at a major original equipment manufacturer customer due to a slower next-generation server transition in enterprise environments.”  Following this announcement, QLogic’s stock price fell over 21% the very same day.

     On July 30, 2015, QLogic announced its actual net revenue for first fiscal quarter of 2016 confirming it at $113.4 million.  Following the announcement, QLogic’s stock fell another 22% the following day.  The forecasted revenue of $133 million is drawn from QLogic’s Fourth Quarter and Fiscal Year 2015 Results press release published on April 30, 2015.  Therein, QLogic’s CEO, Prasad Rampalli, praised its company’s expansion of market share position and product development success, both of which dictated the 13% increase of revenue during fiscal year 2015. 

     Following the July 30, 2015 fiscal quarter report, it became clear that Rampalli’s statements were false or, at least, unrealistic given the information known to him at that time.  The complaint alleges that Rampalli and his fellow executives were aware the build-up in inventory would stagnate sales and artificially shrink QLogic’s product demand.  In addition, a slower-than-predicted transition to a next-generation server had further impacted QLogic’s market share. 

Current Case Status: 

     This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a sixty-day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this sixty-day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in June and update this page as warranted.

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