Not everyone loves their Tripath Chips

GBB · « **on:** 9 Nov 2004, 02:06 am »

Better buy those tripath amps while you can.
---Gary

Tripath's shareholders file class-action suit

EE Times
11/08/2004, 5:51 PM ET

MANHASSET, N.Y. — Shareholders of Tripath Technology Inc. (Santa Clara, Calif.) have filed a class-action lawsuit against the company in the United States District Court for the Northern District of California, alleging the audio IC supplier violated federal securities laws by issuing materially false or misleading public statements.

The suit, filed by law firm Schatz & Nobel (Hartford, Conn.), represents shareholders who purchased Tripath's stock between Jan. 29 and Oct. 22 of this year.

On Oct. 22, Tripath announced that its third-quarter net revenue would be significantly below prior guidance of $4 million to $4.5 million. In addition, the company announced it may have to restate its previously reported revenue for the quarter ended June 30, 2004.

On this news, shares of Tripath fell almost 50 percent, from a close of $1.52 on Oct. 22 to close at 77 cents per share the next trading day, according to the lawsuit.

Rob Babcock · « **Reply #1 on:** 9 Nov 2004, 02:12 am »

Hmmm...that seems to have nothing to do with whether or not people like the chips or amps. Does it?

jswallac · « **Reply #2 on:** 9 Nov 2004, 02:41 am »

Only indirectly. If more people loved the chips then more people would have bought them. I assume they sell for more than cost, helping to make up the profit shortfall. On a different note, I really hate seeing this sort of thing. Unless the company made some outlandish profit claims (which no company lawyer will allow), or they committed some sort of fraud, they should not be sued for simply not making as much money as Wall Street had hoped for. There are certain lawyers that specialize in this sort of thing. Watch for any stock that takes a sharp fall and then sue, claiming the shareholders have been unjustly harmed. Buying securities is risky. If you are not prepared to take the downside along with the upside, put your money in a bank and enjoy your safe 2%.

jswallac · « **Reply #3 on:** 9 Nov 2004, 02:41 am »

Only indirectly. If more people loved the chips then more people would have bought them. I assume they sell for more than cost, helping to make up the profit shortfall. On a different note, I really hate seeing this sort of thing. Unless the company made some outlandish profit claims (which no company lawyer will allow), or they committed some sort of fraud, they should not be sued for simply not making as much money as Wall Street had hoped for. There are certain lawyers that specialize in this sort of thing. Watch for any stock that takes a sharp fall and then sue, claiming the shareholders have been unjustly harmed. Buying securities is risky. If you are not prepared to take the downside along with the upside, put your money in a bank and enjoy your safe 2%.

Rob Babcock · « **Reply #4 on:** 9 Nov 2004, 08:17 am »

That has nothing whatsoever to do with the product! Maybe the management blew smoke up the shareholders asses, or maybe they were gold digging morons- that's neither here nor there. If they didn't make enough money to satisfy the shareholders, tough shit. That's no reflection on the product nor the level of satisfaction of the people who purchased them.

Bad management & sales has zero to do with the product. Do you honestly think the designers were the same guys who did the markets?

Is a Windows PC 25 times better than a Mac simply because they sell 25 X as many?

See what I'm gettin' at?

Hantra · « **Reply #5 on:** 9 Nov 2004, 12:23 pm »

Quote from: Rob Babcock

If they didn't make enough money to satisfy the shareholders, tough shit.

What I think is hilarious about these situations is that the shareholders are suing the company for making PREDICTIONS that didn't necessarily come to fruition.

On the other side of that coin, if Tripath wanted to hire a consulting firm for $3M a year to do market research, and provide more accurate forecasts of market conditions, the board would have balked b/c it eats into profits and dividends. Public companies walk a fine line. And it's getting worse.

And everyone is wondering why jobs are being "exported" from the US.

hmen · « **Reply #6 on:** 9 Nov 2004, 02:44 pm »

Before we come down too hard on the shareholders, the article also says that the company may have to restate it's revenue for the previous quarter. Overstating revenue is a way to pull in investors on false pretenses. That sounds like a more legitimate reason to sue than simply missing a profit projection.

Hantra · « **Reply #7 on:** 9 Nov 2004, 04:02 pm »

Quote from: hmen

Overstating revenue is a way to pull in investors on false pretenses. That sounds like a more legitimate reason to sue than simply missing a profit projection.

Agreed.

TIC · « **Reply #8 on:** 2 Mar 2005, 03:41 am »

Man, I shoulda bought this at $.77. The stock is now at $1.15. That's a pretty good return over 4 months..........

Enjoy,

TIC

art · « **Reply #9 on:** 2 Mar 2005, 05:04 am »

The article said that they issued "materially false or misleading public statements." It did not say that the suit was about falling short on revenue forecasts.

Anyone who thinks that companies don't commit fraud must have forgotten about WorldCon, how it ran itself.........and my MCI 401-k..........into the ground, and probably isn't paying attention.

Shareholders suits in situations like this are common. Most do not get squat, however. Even when the company lies through their teeth.

So the shareholders win and get $0.002/share. Won't affect chip sales any. I don't use them, so won't matter to me.

TIC · « **Reply #10 on:** 2 Mar 2005, 12:34 pm »

Art,

Jim Kramer's "Real Money" spent a lot of time yesterday talking about Worldcom and the upcoming trial of the CEO. Jim did not hold back and basically said the Worldcom leaders were as bad as all of the other corpoarte crooks COMBINED! That's a pretty bold statement considering Enron, etc......

I would like to think that Dr. Tripathi and Company are not this same kind of character and they simply made an accounting mistake. But, I may just be gullible..........

Anyway, there's a lot less money involved with Tripath as it is only a $57M company vs. Worldcom who was many $billion....

Hopefully the rats will get what's comming to them!

TIC

thayerg · « **Reply #11 on:** 2 Mar 2005, 10:07 pm »

These kinds of suits are an occupational hazard of the hi-tech industry. The lawyers who file them probably want a cash settlement out of court regardless of the merits of the claim. Don't judge the company's actions until and unless a guilty verdict is rendered.

Bingo · « **Reply #12 on:** 3 Mar 2005, 03:49 am »

Whatever the situation, when lawyers win, they get paid. When they loose, they get paid.

Bemopti123 · « **Reply #13 on:** 3 Mar 2005, 03:58 am »

Talking about legal hedging.

TIC · « **Reply #14 on:** 3 Mar 2005, 03:59 am »

Bingo,

I think you found the "flaw" in the system.......

Enjoy,

TIC

GrahamnDodder · « **Reply #15 on:** 6 Mar 2005, 07:42 pm »

I happen to be a large (as in hundreds of thousands of shares) shareholder in Tripath.

The lawsuit you reference is, IMO, completely without merit. The restatement was based on the fact that a customer returned a batch of chips to a distributor, not to Tripath, after it decided to reduce the number of final Tripath-based products it was making over the course of a year.

The distributor did not, in fact, return the product to Tripath so far as anyone knows, but it cause a supply/demand disruption that caused Tripath to have to (a) restate a quarter and (b) write down some inventory.

I see Tripath as, basically, a coin flip. The odds that it will succeed are (IMO) better than 50/50.

But if it succeeds, I expect it to return at least 20x (as in 2,000 percent) on investments made at this level.

I've been wrong before, and I've been right before. But my downside is capped at the amount I invested, while my upside is much greater.

And I will listen to my Tripath amp while I wait.

FWIW, these kinds of suits are brought by slimy little "wanna be" law firms trolling for potential class-actions dozens of times every day. They went to law school, didn't succeed, read John Grisham's book "The King of Torts," and started getting "get-rich-quick" ideas.

Frankly, when I read the first post in this thread, it sounded like one of the "law-firm lackeys" fishing for a shareholder amongst the audiophiles.

JMHO.

GnD

art · « **Reply #16 on:** 15 Mar 2005, 07:01 pm »

And now everyone knows what some of us have known for years:

http://www.businessweek.com/ap/financialnews/D88RI95O0.htm?campaign_id=apn_home_up

Trust me on this one........they really are worse.

Pat