Robbins LLP: LeapFrog Enterprises, Inc. (LF) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that an investor of LeapFrog Enterprises, Inc. (NYSE: LF) has filed a federal securities fraud class action complaint in the U.S. District Court for the Northern District of California. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between May 5, 2014 and January 22, 2015. LeapFrog designs, develops, and market technology based learning products for children.
LeapFrog Withdrawals Financial Guidance
According to the complaint, LeapFrog made false and misleading statements and failed to disclose that: (i) it was experiencing a decline in consumer demand; (ii) its new LeapTV video game system launch and shipment was delayed due to developmental issues; (iii) retailers were overstocked with the company’s LeapPad products; and (iv) as a result of the foregoing facts, LeapFrog lacked a reasonable basis for its financial guidance.
The complaint alleges that the truth was revealed by the company’s January 22, 2015, preliminary release of its third quarter results, announcing that due to a fall in consumer demand, its net sales for the third quarter were $145 million, a significant decline from the previous guidance of $220 million to $240 million. The company is expecting a net loss of approximately $124 million. In addition, LeapFrog disclosed that it expected its fourth quarter net sales to likewise decline, causing the company to withdraw its guidance for the fiscal year ending March 31, 2015. On this news, shares of LeapFrog fell $1.35 per share, or nearly 35%, to close at $2.55 per share on January 23, 2015.
LeapFrog Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.