Investors File Suit Against Comcast
Cable Operator Accused of Inflating Stock Price with Misleading Statements
By Jon Hemingway -- Broadcasting & Cable, 1/4/2008 11:54:00 AM
Two class-action suits were slapped on Comcast this week accusing the company of issuing statements about performance that resulted in its stock being “artificially inflated” and “overvalued.”
On Thursday, Coughlin Stoia Geller Rudman & Robbins filed a suit that postulated that company executives intentionally withheld pertinent information about Comcast’s operations. The authors of the lawsuit are seeking compensatory damages for losses suffered from the fall in Comcast’s stock price.
Friday afternoon, Philadelphia-based law firm Spector, Roseman & Kodroff filed a similar suit.
According to the Coughlin Stoia filing, the plaintiffs alleged that the company “materially misled the investing public” by making “false and misleading statements and omitting to disclose material facts,” which resulted in the company’s stock price becoming inflated. The suit claimed that Comcast executives failed to disclose that the company was spending more to retain customers in the face of increased competition and that capital expenses related to plant and equipment was underestimated.
The suit contended that Comcast executives were motivated to use misleading statements in order for chairman and CEO Brian Roberts and chief operating officer Stephen Burke to sell shares in transactions worth more than $15 million in May and June.
Comcast executives named in the Coughlin Stoia suit included Roberts, co-principal financial officer Lawrence Smith, co-principal financial officer Joe Donnelly, co-chief financial officer John Alchin and chief accounting officer and controller Lawrence Salva.
Cable stocks suffered in 2007, pressured by the housing slump, competition from direct-broadcast satellite providers and telcos and the specter of regulation from the Federal Communications Commission.
Comcast’s share price fell 57% in 2007, particularly in the second half of the year, when the company reported its third-quarter earnings and revised its 2007 outlook in November.
Comcast was trading below $17 per share heading into the close Friday afternoon, hitting a new 52-week low earlier in the session at $16.80.
Addressing the lawsuits, a Comcast spokesman said, “The suits have no merit and we will defend ourselves vigorously.”
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