OmniVision Hit With Derivative Complaint After Losing Apple Supply Contract
OmniVision Hit With Derivative Complaint After Losing Apple Supply Contract
(CN) - OmniVision Technologies Inc. faces a shareholder derivative action for losing its contract as exclusive supplier of camera sensors for Apple's iPhone, iPad and iTouch due to delayed development of a new product.OmniVision Technologies designs and markets semi-conductor image sensor devices which are used in a number of consumer and commercial mass market applications including smart phones and cell phones.
Plaintiff Carpenters Pension Fund of West Virginia names CEO, president and chairman of the board Shaw Hong, vice president of engineering and board member Henry Yang and board members Dwight Steffensen, Joseph Jeng and William Hsu.
The complaint alleges defendants had prior knowledge that OmniVision's most anticipated new product, an 8 megapixel sensor announced in February 2011, would not be delivered on time and that company board members were aware of this even as they were marketing it and creating a media buzz which increased the demand for shares. Shareholders claim the company's stock traded at artificially inflated levels reaching a high of $36.43 a share last May. At which point insiders, aware of the company's struggles, began to sell off their shares to the tune of $18 million, the complaint states.
Meanwhile, management continued to issue press releases and make public statements regarding the company's expected positive outlook and high earning potential.
"We remain focused in executing our plan and schedules with out supply chain vendors and other partners," Hong said in May 2011. "We believe that demand will continue to remain strong for fiscal 2012."
OmniVision also introduced a slim version of its 5 mega pixel sensor in May, leaving the market bewildered since it became apparent the company was not directing all its energies toward delivering the 8 mega pixel sensor.
OmniVision publically announced the delay of the new sensor and issued a new lower guidance in August 2011, and the extended delay of the 8 mega pixel sensor resulted in a loss of its key contract with Apple Inc.
The company had provided the electronics giant with sensors for its third and fourth generation iPhones, iPhone 3Gs, iPhone 4, iPad and iTouch products, the complaint states.
The Carpenters Pension Fund of West Virginia is represented by Aelish Baig of Robbins Geller Rudman & Dowd LLP in San Francisco and by Benny C. Goodman III and Erik Luedeke of San Diego.
Copyright Courthouse News Service 2012
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