executives didn’t know demand was going to tank in 2000, a U.S. District Court ruled Tuesday. And even if they had, the Court decided, the safe harbor boilerplate in their statements protected them.
A class action suit led by the Hawaii Reinforcing Iron Workers Pension Fund Trust against Santa Clara, Calif.-based Intel was dismissed in October 2002, but amended and refiled. The suit claimed that Intel had lied and misled analysts about the revenue it expected in the third quarter of 2000. The stock traded at a high of $74.87 on August 31, 2000 after a July earnings statement reported a record $8.3 billion in quarterly revenue with a promise of third quarter revenue being “up.”
The stock price plummeted to $47.94 on September 22 following the company’s weak earnings announcement and the recall of its 1.13 GHz Pentium III chip. Intel’s price lingered in the mid-$40 range through October 2000, with dips into the mid-$30s.
The U.S. District Court in San Jose, Calif., granted Intel’s motion to dismiss the second version of the suit, saying that there was no evidence Intel honchos knew the info they gave analysts was wrong. The ruling pointed out that Intel didn’t say just how much earnings might go up.
The Court also ruled that the caviling language that Intel inserted on its Web site summarizing analysts’ earnings estimates gave due warning to investors to take them with a spoonful of salt.
“In 2000, we saw a precipitous drop in the economy,” Intel spokesperson Chuck Mulloy told InternetNews.com. ” We simply reported the earnings and the market conditions as they happened.”
Mulloy pointed out that Intel’s business continued to grow quarter after quarter — just not as much as they were expecting. Mulloy also said that the Pentium III recall didn’t hurt Intel much, “because there weren’t that many out there.”
Intel’s 52-week range has been $12.95 to $25.50. Shares were exchanging at $24.39 in late day trading.