Lawyers, investors in league against industry leader

GPS World, April, 2008

Attorney-abetted investor response arose quickly to SiRF Technology Holding's 2007 fourth-quarter (Q4) earnings report, which appeared February 4 stating an 89 percent decrease in Q4 profits to $700,000 from $9.1 million the year before. This loss came despite net revenue of $100.4 million, an increase of 35.3 percent.

The stock market reacted quickly; the price of SiRF's stock dropped $8.91 per share to close at $7.36 per share, a one-day decline of 54 percent on volume of 63 million shares, a transaction rate 30 times the average three-month volume.

Twelve law firms have subsequently filed class-action lawsuits against SiRF. In general, the filings allege that SiRF misled investors about the impact of its acquisition of Centrality Communications, and failure to disclose that its customer base was shrinking because of the impact of cellular-enabled GPS products.

SiRF chief executive officer Michael Canning concluded an analysts' conference call on February 4 by stating:

"We had a good revenue growth in 2007 as the PND market continued to ramp strongly and demand for GPS-enabled location technology and wireless applications started a strong ramp. This trend continued into the holiday season. However, the beginning of this year has been marked by increased uncertainty about the strength and direction of the economy; a decline in consumer spending could adversely affect our sales."

Reduced Outlook. SiRF said March 25 it was lowering its revenue forecast for its fiscal first quarter of 2008, ending March 31, and would lay off approximately seven percent of its workforce, or about 50 people. The company had forecast revenue between $71 million and $77 million for Q1; now it anticipates that revenue will come in between $60 million and $62 million. It will close its South San Francisco and Stockholm, Sweden, offices by the end of September 2008.

For further analysis of these events, see the Expert Advice column on page 10.