Aixtron ADRs down after order dilemma

A class action lawsuit was filed against a company that manufactures products for clients in the semiconductor industry following allegations that it violated federal securities laws.

The class action suit was filed against Aixtron SE, as well as some of its officers, in the U.S. District Court for the Southern District of New York on behalf of investors who purchased securities in the company during the class period between Sept. 25, 2014 and Dec. 9, 2015, according to a press release. Aixtron develops metalorganic chemical vapor deposition equipment for semiconductor companies. Customers use the company’s technology to construct advanced parts for electronic and optoelectronic applications. These components are based on silicon, organic or compound semiconductor materials. They are used in all sorts of devices, including fiber optic communication systems, displays, lighting, optical and electronic storage devices, computing and wireless and mobile telephony applications.

In November 2014 the company released the AIX R6 MOCVD system. The equipment is used for the production of LED devices. The AIX R6 was designed to lower production costs while simultaneously simplifying use.

“Certain AIX R6 systems designated for shipment did not meet certain quality specification requirements.”

Class action suit claims Aixtron failed to inform investors of issues with AIX R6 order
The securities class action suit alleges that the defendants made materially false and misleading statements about the company’s business, compliance and operational policies. The lawsuit specifies the statements and explains that Aixtron and its officers failed to disclose that the AIX R6 systems designated for shipment to San’an Optoelectronics, a large Chinese customer, did not meet certain quality specification requirements.

Due to the alleged issue with the quality specifications, the lawsuit claimed Aixtron was not likely to proceed with plans to ship 50 AIX R6 units to San’an. The class action suit goes on to allege that the defendants did not disclose the failure to execute the order and that it would have a significant adverse impact on the company’s prospects. As a result of the aforementioned allegations, the lawsuit explains that the defendant’s statements about the company’s business, compliance and operation policies were were false and misleading and/or lacked a reasonable basis during the relevant period.

On two separate occasions, Aixtron ADRs drop following San’an delay
On Oct. 13, Aixtron issued a press release explaining that it was revising down its previously disclosed revenue guidance for 2015 from between $220 million and $250 million down to between $190 million and $200 million. The company announced the change was due to the fact that a large order to a Chinese customer had to be postponed – seemingly an allusion to the issues with the San’an purchase. The press release went on to explain that the Chinese client’s order would be pushed back to 2016. On news of the revision, Aixtron American Depository Receipt dropped $0.84 per ADR, or 12.8 percent, to close at $5.71 per ADR on Oct. 13.

Just under two months later, on Dec. 9, Aixtron issued another press release explaining that it had reached an agreement with San’an concerning the number of units to be shipped to the Chinese company. The firm reduced its order significantly, from 50 devices to three. Aixtron proceeded to explain that San’an’s qualification requirements had not been met in the original order. Following this announcement the company’s ADRs dropped once again, falling $3.05 per ADR, or 40 percent over two trading days, to close at $4.49 per ADR on Dec. 10.

For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.