NextWave is a mobile broadband and multimedia technology company that develops, produces and markets mobile multimedia and wireless broadband products.
The class action complaint alleges that during the Class Period, NextWave issued materially false and misleading statements regarding NextWave's business and financial results. As a result of NextWave's false statements, NextWave stock traded at artificially inflated prices during the Class Period, reaching as high as $10.10 per share in June 2007.
On August 7, 2008, after the market closed, Nextwave issued its second quarter 2008 financial results, announcing it only had $71.1 million in cash and similar instruments available as of June 30, 2008 and, unless it raised money, its cash would run out at the beginning of October 2008. As a result, NextWave was seeking financing that would give NextWave enough money to operate through June 2009. On this news, NextWave's stock fell $1.90 per share to close at $0.95 per share, a one-day decline of 67%.
According to the class action complaint, the true facts, which were known by NextWave but concealed from the investing public during the Class Period, were as follows:
(a) NextWave did not have adequate sources of liquidity to continue operations as it executed its growth strategy and continued making aggressive worldwide acquisitions;
(b) NextWave had no reasonable basis to make favorable statements that NextWave's WiMAX semiconductor products would be available for commercial sale in the first half of 2008;
(c) NextWave's growth and acquisition strategy was not financially successful and did not provide the basis for continued growth or financial success because it was straining NextWave's fragile liquidity position and NextWave did not have the financial resources to continue to operate its world-wide operations through the end of 2008;
(d) NextWave failed to timely disclose that it had invested all of its marketable securities in extremely high-risk and illiquid auction rate securities; and
(e) NextWave's ability to continue as a going concern was seriously in question by reason of the facts alleged in subparagraphs (a)-(d) above.
Name (Stock Symbol)
NextWave Wireless, Inc. (WAVE)
NextWave Wireless Inc. is a holding company whose subsidiaries develop and market mobile multimedia and wireless broadband products.
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