Billabong faces class action lawsuit
Yesterday Billabong announced it had received notice of a class action lawsuit over market disclosures it made in 2011.
The lawsuit was filed by Slater & Gordon who said they planned to seek compensation for shareholders, alleging the company gave earnings guidance for the 2012 financial year that lacked reasonable grounds.
In both February and August of 2011 Billabong made statements forecasting strong earnings growth the following financial year, however in December 2011 it withdrew the guidance and said earnings would fall. In response, Billabong’s share price fell from $3.64 immediately prior to the disclosure to $1.77 on 20 December 2011, a fall of about 51%.
The class action is being brought by people who bought shares between 18 February 2011 and 19 December 2011.
Despite the 2011 stock market tumble Billabong founder Gordon Merchant still believed Billabong shares were good value. In February 2012 he scoffed at a $3.30 take over offer by TPG saying he wouldn't sell for even $4 a share. By June of that year Billabong shares were worth just $0.96.
Yesterday Billabong released a statement saying it "wholly rejects and intends to vigorously defend the claim", which seeks unspecified declarations and unquantified damages. It also said the board has appointed a subcommittee to handle the lawsuit and its management "remain absolutely focused on the ongoing turnaround of the company's operations globally".
In February Billabong posted a half-year profit, its first in three years.
Comments
Slater & Gordon business model: Use personal injury/work cover claims as a "we fight for the people" marketing front - meanwhile make big bucks pursuing listed companies over continuous disclosure shareholder class actions, but never spending the human hours on going to trial, just reaching a settlement and taking its fees from the top of the settlement fund, leaving the scraps for the shareholders.
I'm a lawyer so I speak from an understanding of the class action "industry". It is the litigation funders (yes that's right, there are companies that make $$ funding other peoples' lawsuits) and plaintiff law firms that benefit from class actions. And yes, trials are time consuming and heck you may lose and get slapped with an adverse costs order, so that is why they always settle - to at least recover their fees.
Don't know why they are after Billabong though, can't have the puffiest purse at the moment?
Walter, with the greatest respect, as a lawyer please tell me you didn't confuse 'lose' with 'loose' and it's just a typo?
Haha yes just a typo! That is what professional indemnity insurance is for. Plenty of other typos in there too but I'm not going to fix them - who am I kidding, I've fixed them already....
You got me on that one before Zen.
Money is Evil , These Major Brands like "billabong" Target surfers as an audence To gain money , Unlike a local shaper or such , thoe if you own a cat or dont where a leash then its your fault , Living , loving , chillen ,
What's all this about cats?
I agree. If your cat isn't on a leash, you deserve the consequences.
On second thoughts, did I read that right?
Especially if its a Cat 5? No leash = disaster;)
Off topic sorry.
Thanks for that welly.
Back on topic, in my humble opinion, screw Slater & Gordon and screw those shareholders they claim to represent (as pointed out by walter-r-white, Slater & Gordon represent only themselves). I hope they (Slater & Gordon and the investors) all lose. There are risks in life and the share market is one them. I have invested in shares. Some aren't performing and are less than what I bought them for (thankfully others are) but that is the risk I take. There are no guarantees. People have to be responsible for their own decisions, including gambling on the share market.
As a side note, aren't shares based on market sentiment? If the market (i.e. investors) have confidence they will buy shares. If not confident, they will sell shares. Assuming there are available shares, the take up of shares being sold determines the price of the share (strong take up - under valued or higher confidence according to market, weak take up - over valued or lower confidence according to market). This to me would say that Billabong can't be responsible for the share price. They can only be responsible for the selling of physical product and responsible business acumen (lowering overheads, selling product, marketing, not expanding if market conditions are not right or no money in the bank etc, all to increase business profitability (note: sharemarket profitability and physical business profitability are two completely separate streams)). If the business has stayed stable or profitability increased then I'd say it's not Billabongs fault. If Billabong honestly thought they would have an increase in earnings (based on evidence such as quarterly reports etc), but then economy hit's the skids, people keep money in their pockets and people didn't buy the physical product, then they are within their right to offer a new notice of forecast earnings (at the earliest possible moment when they are aware of change in earnings). Again, the shareholders take the risk.
Ash, I was gonna have a go at you about your disregard for paragraphs, 'cept you've got one paragraph break in there so I wont.
Carry on...
He surfs like he writes too Stu, goes as fast as he can from point A to point B, somewhere in the middle of the wave he remembers that he has to do a turn somewhere (hence paragraph break) then falls off at the end:)
Sorry, was channelling my inner stu, after the 'Shapers coming up short' article. Can go back and edit if you like :) . Just taking the piss stu, love ya work.
Ash, I'd get in early on this one. I'm selling up and am going to throw all my eggs into this basket. Their impending IPO looks set to go gangbusters.
http://www.1worldwholesale.com/
Not so sure zen, their business model appears to only apply just a tiny selection to an emerging market (sarong wearing males). They were only spotted in the "Traditional Sarongs" and "Clothing section". Appears to be pure tokenism. Also, what's with the women only in the "Plus size" section. Plenty of plus size males around.
If they improve on this, might be worth a look. If they can't get the simple things right, you wonder what else is not right in the business. Mind you, could be under-valued because of it, with plenty of potential. Would have to look at how many shares are offered and at what price (and if they throw in a couple of Traditional sarongs). Plenty of value in sarongs, 'the most versatile clothing option' (how's that for a marketing line???)
Once again, a thoughtful, lucid and well balanced analysis giving careful consideration to the possibility of future growth whilst in turn weighing up the risk factors and other mitigating circumstances.
And that my young mate is why you will be retiring early and I'll no doubt be working into my 90's and begging you not to kick me out of your granny flat;)
By the way, you do surf better than I mentioned above but riding in front of me does not make you a better surfer:)
I don't like to think of it as riding in front of you, I like to think of it as showing you the way. Give a man a fish and he will stink that damn granny flat up, teach a man to fish and ....oh shit, you will still be cooking it in the granny flat. Fuck it, alright it's a drop-in on my brother, just how it should be (not that I don't owe you a couple anyway).
So I can stay?
Well, the conditions of your bail and your electronic ankle bracelet says that you must.
The ankle bracelet? The cops must be pretty stupid to think that I sleep for 23 hours, then walk along the back fence only to pause in the neighbours sandbox momentarily and then return to the couch.
As stu said earlier, What's all this about cats?
Anyone who defends the Board of aforementioned disaster has "rocks" or "shite" in their head!
Dig deep for your WSL!