This is a securities fraud class action lawsuit against Worldspace Inc. and certain of its officers and directors alleging that the representations made in connection with the sale of WorldSpace common stock in the IPO were materially false and misleading.
Prior to its IPO, Worldspace sought to increase its subscriber base, a metric of success, by offering a promotion to new customers that was a reduced price three-month, pre-paid subscription to the WorldSpace 'access control system'. Following the end of the promotional period, these promotional customers were not timely removed from the subscriber count. Rather than report these expired subscriptions as 'churned,' Worldspace continued to include these expired subscriptions in its subscriber count for an additional 90-days following the expiration of the initial three-month promotional period.
On March 16, 2006, on a conference call with investors, WorldSpace revealed that service to subscribers was not immediately discontinued when a customer failed to renew its subscriptions. This news shocked the market, causing WorldSpace share to plummet the next day, March 17, 2006, by $2.63 per share, a more than 22% drop from the previous day's closing price of $11.52 per share.
Name (Stock Symbol)
WorldSpace, Inc. (WRSPQ.PK)
WorldSpace, Inc., together with its subsidiaries, engages in the design, development, construction, deployment, and financing of a satellite-based radio and data broadcasting service.
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