Lieff Cabraser With Class Action Litigation Vs. Violin Memory

The law firm of Lieff Cabraser Heimann & Bernstein, LLP announces that class action litigation has been brought on behalf all purchasers of the securities of Violin Memory, Inc. between September 27, 2013 and November 21, 2013, inclusive, including all purchasers of Violin Memory common stock pursuant or traceable to the company’s registration statement and prospectus issued in connection with its September 27, 2013 IPO.

The actions charge Violin Memory, certain of its officers and directors, and the underwriters of the IPO with violations of federal securities laws.

Violin Memory develops and supplies memory-based storage systems to enhance storage performance with high-speed applications, servers, and networks in the Americas, Europe, and the AsiaPac.

The actions allege that throughout the class period, defendants made false and misleading statements and failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants misrepresented and/or failed to disclose, among other things, that at the time of the IPO, Violin Memory’s sales had already been adversely affected by the looming 2013 U.S. government shutdown. The shutdown was important to Violin Memory because the U.S. government is a large indirect customer of the company. Moreover, the company’s sales and R&D expenses had substantially grown during the third quarter of fiscal 2014, increasing its cash burn-rate to an unsustainably high rate based on the company’s cash on hand. Thus, Violin Memory’s sales growth and profit margins were allegedly declining, diminishing its profits at the time of the IPO.

On November 21, 2013, Violin Memory announced disappointing financial results for the third quarter of fiscal 2014. The company reported a larger than expected net loss of $0.85 per share, and sales of $28.3 million which was below analysts’ expectations. On the same day, during an earnings conference call with analysts and investors, defendants disclosed that prior to the IPO, “[a]s a result of unexpected reprioritization of budgets ahead of the federal government shutdown, some . . . [of the company’s] forecasted [sales] were canceled and others were deferred to future quarters pending funds being allocated to the project[s],” and that Violin Memory incurred increased sales and marketing costs during the third quarter of 2014.

On this news, Violin Memory’s stock price fell $2.89 per share, or over 48%, from a closing price of $6.00 on November 21, 2013, to close at $3.11 on November 22, 2013.