Stockholders v IBIS Technology Corporation
Stockholders Sue IBIS Technology for Failing to Tell the Truth About Sales
Several class actions have been filed against semiconductor wafer manufacturer IBIS Technology Corporation (Nasdaq: IBIS) and certain of its officers and directors by stockholders who purchased the company's common stock between October 2, 2003, and December 12, 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 IBIS had, since 2000, planned to transition out of the manufacture of semiconductor wafers into chip implantation. It did so by designing implantation devices based on proprietary equipment designs owned by IBM. During the applicable period, the action alleges that IBIS failed to disclose to the investing public that it was in ongoing negotiations with IBM for the right to use its patented implantation technology. IBIS allegedly knew that it could not sell any of its implantation devices prior to concluding its negotiations with IBM, and failed to disclose this fact. As a result, the defendant's statements during the class period that it had received completed orders for its implantation machinery were allegedly knowing misrepresentations.
In addition, the action alleges that IBIS was in precarious financial condition that it failed to disclose. Because of an industry-wide shift towards 300mm wafers, IBIS' 200mm wafers were no longer as desirable. IBM was IBIS' only customer for its 200mm wafer product, and would buy less in the coming year because of increasing use of 300mm wafer technology.
On December 15, 2003, as year-end approached, problems began to become apparent. IBIS finally disclosed that its fourth quarter wafer product would be reduced to approximately $1 million, down from $2.7 million in the fourth quarter of 2002 due to reduced purchases by its largest customer, IBM. Additionally, it would have to take a "material charge" due to the impairment of its smaller wafer production equipment. On the same day, IBIS filed its Form 8-K with the SEC, admitting that there would be no sales of its new implantation equipment in 2003. In reaction to this news, IBIS stock fell from $15.40 per share close on December 12, to a close of $13.20 per share on December 15, 2003. On December 16, it closed at $10.37 per share, on extraordinarily high volume of 4.4 million shares, almost 50% of the outstanding shares of IBIS' common stock.
