Cambium’s Stock Traded at ‘Artificially Inflated Prices,’ Alleges Class Action

Senior officers of Cambium Networks made “materially false” or misleading statements and failed to disclose “material adverse facts” about their business, operations and prospects between May 8, 2023, and Jan. 18, 2024, alleged Benjamin Hamby’s Securities Exchange Act class action Wednesday (docket 1:24-cv-04240) in U.S. District Court for Northern Illinois in Chicago. Cambrium designs, develops and manufactures wireless broadband and Wi-Fi networking infrastructure solutions. The complaint alleges that the company, its former and current CEOs and its former chief financial officer failed to disclose that the company’s distribution channels had an inventory buildup, that the company and its distributors were reasonably likely to offer aggressive discounts to reduce the high channel inventories and that revenue “would decline sequentially until the excess channel inventory was sold through,” it said. They also failed to disclose that Cambium was likely to incur “significant charges” to write down excess and obsolete inventory, and that as a result, its fiscal 2023 revenue and earnings would be “adversely affected,” it said. The complaint further alleges that the defendants’ positive statements about the company’s business, operations and prospects lacked “a reasonable basis,” it said. As a result of the defendants’ wrongful acts and omissions, and the “precipitous decline” in the market value of Cambium’s stock, Hamby and other class members “have suffered significant losses and damages,” it said. The complaint cites the example of Cambium’s Oct. 4, 2023, announcement that preliminary third-quarter 2023 revenue would fall between $40 million and $45 million, compared with the previous outlook of $62 million to $70 million. The company blamed the shortfall on a decrease in orders and an increase in stock rotations from distributors in the enterprise business, plus pressure from channel inventories, said the complaint. The disclosure sent Cambium shares tumbling 36.2% the next trading day on “unusually heavy trading volume,” it said. The market for Cambium’s securities “was open, well-developed and efficient at all relevant times,” said the complaint. As a result of the defendants’ materially false or misleading statements or failures to disclose, the company’s securities traded at “artificially inflated prices” during the class period, it said. Hamby and other members of the class purchased Cambium’s stock, “relying upon the integrity of the market price” of the company’s securities and market information relating to Cambium, “have been damaged thereby,” it said.