Several class actions have been filed against software provider Portal Software, Inc. (Nasdaq:PRSF) and certain of its officers and directors by stockholders who purchased the company's common stock between May 20, 2003, and November 13, 2003. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

The action alleges that the defendants issued numerous public statements concerning Portal's revenue growth, product and marketing initiatives, and increasing revenues and profits while failing to disclose that demand for the company's products was materially declining. Prior to the disclosure of this adverse information to the market, Portal completed a public offering of its common stock raising over $56 million in net proceeds and the individual defendants, as well as other high-level executives of Portal, sold their personally-held Portal common stock to the unsuspecting public reaping proceeds of more than $4.8 million.

The class period commences on May 20, 2003, the date on which Portal issued a press release announcing its first quarter financial results, for the period ending that day. In addition to announcing its financial results, the defendants represented, among other things that: (a) "We are the only company in our market reporting increasing revenues and quarter-to-quarter product license growth."; and (b) that Portal would "return to pro forma profitability [excluding certain acquisition costs] and positive cash flow operations within the current fiscal year."

In the June 2003 issue of Worldwide Telecom, Portal allegedly announced that eircom, an Ireland-based provider of fixed telecommunications, had successfully implemented Portal's convergent billing platform, Infranet. On August 19, 2003, Portal issued a press release announcing its financial results for the second quarter of 2003, the period ending August 1, 2003-- it reported revenues of $33.2 million for the second quarter. On September 12, 2003, the company announced that it had priced a public offering of more than 22 million shares of its common stock, raising more than $56 million. In connection with the offering, it filed a registration statement with the SEC which included, among other things, positive representations concerning the Company's business and its core product, Infranet.

The action alleges that these statements, in addition to others, were each materially false and misleading when made and (a) that Portal’s sales and marketing efforts were not performing well, causing it to experience declining demand for its products and services; (b) that the company was experiencing an adverse and material lengthening of product sales cycles and a material increase in deferred revenues; (c) that due to continuing and severe problems with the Portal’s core products, it was unable to service its existing customers, causing additional erosion of its revenue streams; and (d) that Portal lacked a reasonable basis for its earnings projections at all times.

The class period ends on November 13, 2003. On that date, Portal issued a press release announcing that it expected net losses of $0.36 - 0.40 per share for the third quarter fiscal 2004 versus prior earnings guidance of net profits of $0.04 per share. The company cited contract delays and revenue recognition deferrals as the reason for its problems. Market reaction to the defendants' belated disclosures was swift and severe. In after-hours trading on November 13, 2003, the price of Portal common shares fell more than 42.5% to open at $8.77 per share on November 14, 2003, and have decreased more than 51% from a class period high of $17.93 per share reached less than a month before on October 15, 2003.

If you bought Portal Software publicly traded securities between May 20, 2003 and November 13, 2003, and you wish to serve as lead plaintiff, you must request it of the court no later than January 19, 2004. Any member of the purported class may request appointment to serve as lead plaintiff through any counsel of their choice, or may choose to do nothing and remain an absent class member.