3 Min Read
NEW YORK (Reuters) - IBM Corp (IBM.N) on Wednesday won the dismissal of a pair of proposed class action lawsuits filed after the company in 2014 announced it would take a $2.4 billion write-down in connection with selling its semiconductor unit.
U.S. District Judge William Pauley in Manhattan in a pair of rulings dismissed an investor lawsuit accusing IBM of securities fraud, as well as a lawsuit brought on behalf of participants in a company 401(k) plan.
Neither IBM nor lawyers for the lead plaintiff in the investor lawsuit responded immediately to requests for comment.
The lawsuits stemmed from IBM's Oct. 20, 2014 announcement that it would pay GlobalFoundries Inc $1.5 billion to take over a money-losing unit that designed and produced microchips.
IBM also announced it would take a $2.4 billion write-down on the entire value of assets in the microelectronics unit, as well as $800 million of other unspecified costs.
The announcement was accompanied that day by IBM disclosing disappointing third-quarter financial results. Following the announcements, IBM stock dropped more than 17 percent, the plaintiffs said.
Investors led by KBC Asset Management NV contended IBM inflated its stock price before selling the unit by carrying the unit's property, plant and equipment assets on its books at $2.4 billion, when the assets were actually worthless.
But Pauley said the lawsuit "fails to raise a strong inference" that the need to write-down the unit was so apparent to IBM before the October 2014 announcement that failure to take an earlier write-down constituted fraud.
The judge similarly granted IBM's motion to dismiss a lawsuit by plaintiffs Larry Jander and Richard Waksman on behalf of participants in IBM's 401(k) Plus Plan, though he said the could seek to file an amended complaint.
Sam Bonderoff, the plaintiffs' lawyer, said while he was disappointed by the ruling, "we are gratified that it did so without prejudice, giving us leave to file an amended complaint, which we intend to do."
The cases in the U.S. District Court, Southern District of New York, are International Association of Heat and Frost Insulators and Asbestos Workers Local #6 Pension Fund v. International Business Machines Corporation, No. 15-02492, and Jander v. International Business Machines Corporation, No. 02492.
Reporting by Nate Raymond in New York; Editing by David Gregorio