Manugistics Group Inc, the Rockville, Maryland supply chain management company has been hit with a class action lawsuit alleging misrepresentation of the business and its financial operations, and insider trading by certain officers and directors of the company. The complaint has been filed in the US District Court of Minnesota by Reinhardt & Anderson. But it looks as though this will be the first of a bevvy of such suits expected to be filed. Other attorneys told Computergram they are preparing a separate case, and said they expect other cases to be filed against Manugistics in the coming days and weeks. Manugistics has just reported its first quarter results, having warned shareholders that the company had not performed as well as analysts expected (CI No 3,416). The company saw first quarter net losses of $8.1m down from profits last time of $2.0 on revenues up 15.6% to $39.8m. Following the news, Manugistics told analysts at Morgan Stanley it is confident it can return to profitability in the second quarter. Randell Steinmeyer at Reinhardt & Anderson, believes the firm has a strong case and points out that $6.75m worth of Manugistics stock was sold by Manugistics employees between March 27, 1998 and May 21, 1998, the class period. Manugistics shares rocketed from around $37 to as high as $66.37 by the first few days in April, after chairman and chief executive William Gibson made an official announcement saying he was very comfortable about the company’s financial position and short term expectations. Prices dropped rapidly when Manugistics announced it would not meet analyst expectations on May 23. As we went to press, Manugistics had not received the suit and said it could not comment until that has happened. The company is blaming its poor performance on a disorganized sales force (CI No 3,428).
