After filing an initial suit against Virgin Mobile USA Inc. last week on behalf of shareholders who bought stock in connection with the wireless provider's October IPO, or thereafter in the open market, class-action firm Kahn Gauthier Swick LLC on Wednesday encouraged investors having lost more than $100,000 to ask about taking the lead plaintiff position in the case.
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The New Orleans- and New York-based firm filed a class-action suit in the U.S. District Court for the District of New Jersey against the Warren, N.J., wireless service provider, as well as certain officers, directors and controlling majority shareholders, and its underwriters, it said Nov. 22. The news came days after the firm launched an investigation into the company's civil liability following Virgin Mobile USA's report of a wider third-quarter earnings loss. Virgin Mobile USA, a venture between Sprint Nextel Corp. and Richard Branson's Virgin Group, said Nov. 15 it lost $7.3 million on revenue of $319 million, compared to a net loss of $5.1 million on revenue of $271 million for the third quarter of 2006.
Also this week, New York firm Coughlin Stoia Geller Rudman & Robbins LLP filed suit in the U.S. District Court for the Southern District of New York on behalf of shareholders, calling the registration statement inaccurate and misleading and alleging the prospectus contained "inaccurate statements material fact because they failed to disclose that the company would report a widening loss for the third quarter of 2007 and that subscriber growth trends were slowing dramatically."
After Virgin Mobile raised $412.5 million in its IPO, its shares debuted Oct. 11 at their $15 offer price, ended the day flat and have since steadily declined to close Tuesday at $7.52 apiece. Ahead of its IPO, Virgin Mobile reported a loss in 2006 of $36.7 million on $1.1 billion in revenue and income of $26.5 million on $667 million in revenue for the first half of the year.
Virgin Mobile seeks to differentiate itself from other cell-phone operators by focusing on younger consumers and offering them pay-as-you-go plans. Ahead of its debut, the company listed among risk factors its short operational history and its mobile virtual network operator business model, competition in the wireless market, and customer turnover, or churn. — Carolyn Murphy
See Reuters story on shareholder suit against Virgin Mobile
See TheDeal.com story Oct. 11 on Virgin Mobile's debut
See Coughlin filing
