Extreme Networks Investors Alerted to Class Action Details

Understanding the Class Action Lawsuit against Extreme Networks

Investors in Extreme Networks, Inc. (NASDAQ: EXTR) are currently facing some challenging news as a class action lawsuit has been filed in the U.S. District Court for the Northern District of California. This suit affects all who acquired securities of Extreme Networks during the defined Class Period, which extends from July 27, 2022, to January 30, 2024. Investors are encouraged to take action before the deadline of October 15, 2024, to apply to be appointed as lead plaintiffs in this matter.

Recent Disclosures Impacting Extreme Networks

A series of unexpected announcements from Extreme Networks have contributed to the current situation. On January 25, 2023, the resignation of CFO Remi Thomas alerted the market, which was further troubled by a significant drop in the company's backlog, decreasing from a solid $542 million. The metrics indicating the health of their business, such as the Product Book to Bill Ratio and the Service Book to Bill Ratio, also took a considerable hit. In a sharp turn, this led to a notable decline in share price by approximately 14.5% in one day.

Declining Backlogs and Revenue Projections

The situation worsened on August 24, 2023, when Extreme Networks disclosed a staggering drop in its backlog to $267.3 million—an astonishing decrease of roughly $245 million compared to the previous year. Following this news, shares fell again, indicating a growing concern among investors about the company's financial stability.

Further Unfolding of Events and Their Consequences

On November 1, 2023, the company conveyed caution regarding revenue growth, predicting only a mid-to-high single-digit increase for the fiscal year 2024. Furthermore, they anticipated that their backlog figures would decrease to between $75 million and $100 million by the end of the fourth quarter in 2024. These revelations triggered another significant drop in share price, demonstrating the market's negative reaction to the company’s outlook.

Updated Revenue Forecasts and Market Reactions

As 2024 unfolded, additional updates emerged that caught the attention of investors. On January 8, 2024, the company further reduced its revenue projections for the second quarter and lowered its long-term forecasts, which prompted yet another decline in share price. By January 31, 2024, new figures indicated a 7% decline in revenues year-over-year—signaling deeper trouble within the company's operational framework.

The Allegations Behind the Lawsuit

The core of the lawsuit alleges a failure to inform investors about the declining demand for Extreme Networks' products, largely attributed to customers over-ordering during the pandemic. Rather than providing an accurate depiction of ongoing market conditions, the company’s reliance on backorders left investors in the dark about the true demand landscape.

How to Get Involved and Protect Your Interests

If you've purchased or acquired securities from Extreme Networks, it's essential to stay informed about your rights and options. Interested parties are encouraged to reach out to Thomas W. Elrod of Kirby McInerney LLP to gain further insight or to discuss their situations without any obligation.

About Kirby McInerney LLP

Kirby McInerney LLP is a renowned law firm based in New York, focusing on securities litigation, antitrust, and consumer rights. The firm has made significant strides on behalf of shareholders in recovering billions of dollars through its legal efforts. For those seeking more information about the firm or their legal proceedings, the Kirby McInerney LLP website offers an array of resources.

Frequently Asked Questions

What are the key dates for the class action lawsuit?

The primary date to keep in mind is October 15, 2024, which is the deadline for investors to apply to be lead plaintiffs in the lawsuit.

How did recent company announcements affect Extreme Networks' stock?

Multiple disclosures about declining backlogs and revenue forecasts have led to sharp decreases in share price, indicating investor concern.

What is the lawsuit alleging against Extreme Networks?

The lawsuit claims that Extreme Networks failed to disclose declining client demand and excessively relied on backlog orders to fulfill expectations.

Who can participate in the class action lawsuit?

All investors who purchased Extreme Networks securities during the specified Class Period are eligible to participate in the class action.

How can I contact Kirby McInerney LLP?

Interested individuals can contact Thomas W. Elrod of Kirby McInerney LLP via email or through their official contact form available on their website.

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