"The complaint alleges that, throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the complaint alleges: (a) that Rosetta Stone was facing intense competition for its products during the Class Period, including free competitive product offerings; (b) that the free and lower priced competitive product offerings, not a temporary reduction in advertising, was having a material adverse effect on the Company’s Class Period revenues, particularly U.S. consumer revenues; (c) that the favorable sales booking numbers Rosetta Stone reported during the Class Period was the result of key retail partners maintaining inventory of the Company’s products well above historic levels; (d) that Rosetta Stone’s reported sales bookings and revenues during the Class Period were the product of manipulation; and (e) that, based on the foregoing, defendants lacked a reasonable basis for their positive statements about Rosetta Stone’s revenues, sales bookings, unit volume, new product introductions and advertising.
On February 28, 2010, the last day of the Class Period, Rosetta Stone issued a press release announcing its results for the fourth quarter and year ended December 31, 2010. For the quarter, the Company reported revenue of $74.3 million, a 5% decrease from the prior year period, net income on a Generally Accepted Accounting Principles basis of $5.0 million, or $0.23 per share, a decrease of 60% from the 2009 fourth quarter. On this news, shares of the Company’s stock fell $1.77 per share, or almost 12%, to close at $13.19 per share, on extremely heavy trading volume.
Plaintiff seeks to recover damages on behalf of all purchasers of Rosetta Stone’s common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.