Investors in financially-troubled Sybase Inc have finally had enough and have initiated a class action suit against it. The Emeryville, California database and tools company first irked shareholders on January 2 by announcing that its high-end expectations for the fourth quarter were just $0.02, and that it may post a loss (CI No 3,318). After a year that seemed to indicate financial recovery, the profit warning came as a shock. Then Sybase announced last week that it was postponing its fourth-quarter report due to improper revenue recognition relating to transactions at its Japanese subsidiary (CI No 3,331). It said that the problems would lead to a negative impact on revenues in the range of $60m-$65m. The company also said it would have to restate revenues for the first three quarters of the year. On the back of the news Sybase shares plunged, losing more than 20% of their value in one morning. For the first nine months of the year, Sybase had reported net income of $13.1m, or 17 cents a share, on revenue of $723.7m. With the expected fourth-quarter loss due to the restatement, the company likely will report a sizable loss for the year. The class action suit accuses the company and its officers of fraud, alleging that Sybase intentionally covered up its problems with reports of false profits while insiders took advantage of the situation by selling about $6.0m in stock.
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