More Investors Sue Security Firm
For the second time in three days Monday, a law firm representing shareholders of Internet Security Systems Inc. filed a class-action lawsuit against the security vendor.
Both suits allege that the Atlanta-based vendor provided investors with misleading financial guidance regarding the companys performance during the first quarter of this year. The suits also charge that ISS officials knew that they had too many employees and that the companys costs were out of line with its revenue.
On April 18, ISS reported revenue of more than $61 million and earnings of $0.15 per share for the first quarter of 2001. Company officials also reported that they were comfortable with estimates that ISS would earn between $64 million and $67 million in the second quarter.
However, in July, ISS reported that its revenue would be in the $50 million to $52 million range for the second quarter, far below its original guidance. Less than three weeks later, the company laid off 12 percent of its workers and slashed some fringe benefits and other expenses.
"Its certainly not unusual to see lawsuits like this after a difficult quarter. But we obviously believe we havent perpetrated any fraud or deceit on our shareholders. Well vigorously defend ourselves against the suits," said Sean Bowen, general counsel at ISS.
The suit filed Monday by Schiffrin & Barroway LLP and the one filed Friday by Cauley Geller Bowman & Coates LLP allege that ISS executives knew the company "had too many employees and greater expenses than it could afford, given its level of sales."
Both suits were filed in U.S. District Court for the Northern District of Georgia.