Woburn Retirement System, Et Al. V. Omnivision Technologies, Inc., Et Al
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Case5:11-cv-05235-RMW Document1 Filed10/26/11 Page1 of 24 Al I Nancy L. Tompkins (Bar. No. 183623) KERR & WAGSTAFFE LLP 2 100 Spear Street, 18th Floor San Francisco, California 94105 3 Telephone: (415) 371-8500 Facsimile: (415) 371-0500 4 Email: tompkinskerrwagstaffe.com 5 Local Counsel for Plaintiff Woburn Retirement System 6 Christopher J. Keller 7 Michael W. Stocker (Bar No. 179083) Rachel A. Avan 8 LABATON SUCHAROW LLP E-filing 0 140 Broadway 9 New York, New York 10005 Telephone: (212) 907-0700 10 Facsimile: (212) 818-0477 Email: [email protected] 11 [email protected] [email protected] 12 Counsel for Plaintiff 13 Woburn Retirement System 14 15 UNITED STATES DISTRICT COURT 16 NORTHERN DISTRICT OF CALIFORNIA 17 RMpl Mao 18 WOBURN RETIREMENT SYSTEM, CaseTo) Individually and On Behalf of All Others )V 19 Similarly Situated, ) CLASS ACTION COMPLAINT ) FOR VIOLATION OF THE 20 Plaintiff, ) FEDERAL SECURITIES LAWS 21 DEMAND FOR JURY TRIAL 22 ) OMNI VISION TECHNOLOGIES, INC., ) 23 SHAW HONG, ANSON CHAN, and ) AURELIO "RAY" CISNEROS, 24 ) ) 25 Defendants. ) 26 27 28 CLASS ACTION COMPLAINT Case5:11-cv-05235-RMW Document1 Filed10/26/11 Page2 of 24 1 Plaintiff Woburn Retirement System ("Woburn" or "Plaintiff') makes the following 2 allegations based upon the investigation of Plaintiffs counsel, which included a review of U.S. 3 Securities and Exchange Commission ("SEC") filings by Omni Vision Technologies, Inc. 4 ("OmniVision" or the "Company"), as well as regulatory filings and reports, securities analysts' 5 reports and advisories about the Company, press releases and other public statements issued by 6 the Company, and media reports about the Company. Plaintiff believes that substantial 7 additional evidentiary support will exist for the allegations set forth herein after a reasonable 8 opportunity for discovery. 9 NATURE OF THE ACTION 10 1. This is a federal securities class action brought on behalf of all persons who 11 purchased or otherwise acquired the publicly-traded common stock of Omni Vision (the "Class") 12 between August 27, 2010 and October 13, 2011, inclusive (the "Class Period"), seeking to 13 pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act") against 14 Omni Vision and certain of its officers and/or directors. 15 2. Omni Vision is a designer and manufacturer of image sensors that capture initial 16 image data and perform preliminary data processing. Image sensors are used in digital cameras 17 to convert an optical image into electronic signals. OmniVision is one of the leading suppliers 18 of complementary metal-oxide-semiconductors ("CMOS") sensors for use in mobile 19 telephones, offering 39 different products including 5- and 8-megapixel mobile phone sensors 20 capable of producing high-definition video. 21 3. One of Omni Vision's most high-profile contracts has been with Apple, Inc. 22 ("Apple"). OmniVision was the exclusive supplier of camera sensors for Apple's third and 23 fourth generation iPhone smartphones, the Whone 3GS and the iPhone 4, which were released 24 on June 9, 2009 and June 24, 2010, respectively. OmniVision has also supplied Apple with 25 camera sensors for its tablet computer, the Wad, and its portable media player and personal 26 digital assistant, the iPod Touch. 27 4. "Inclusion in Apple devices is a boon for component makers.. ." Adam 28 Satariano, Omni Vision Falls as Website Sees Sony Sensor in Apple iPhone, BusinessWeek, Oct. 11 CLASS ACTION COMPLAINT I I Case5:11-cv-05235-RMW Document1 Filed10/26/11 Page3 of 24 1 15, 2011. The importance of the contract with Apple cannot be understated: according to an 2 IHS analyst,' Apple may sell more than 100 million iPhones in 2012. Id. Research firm 3 Detweiler Fenton has explained the importance of Apple to Omni Vision's prospects, noting that 4 "Apple will account for nearly a third of [Omni Vision's] chip demand, and most of its 5 shipments of 5 MP sensors." Eric Savitz, Omni Vision Reportedly to Supply Image Sensors for 6 Next Wad, Barrons, Oct. 29, 2010. Based on a recent estimate, Apple has sold 27.6 million 7 iPhone 3GS smartphones, Piper Jaffray: iPhone 3GS Upgrade Stampede Ahead, MacNN.com, 8 Oct. 12, 2011, suggesting that Omni Vision's contract with Apple has represented more than 9 $250 million in revenue since the smartphone's launch. 10 5. During the Class Period, Defendants issued materially false and misleading 11 statements regarding the Company's business and financial results. Specifically, Defendants 12 failed to disclose that the Company had lost its exclusive contract to supply imaging sensors for 13 Apple's celebrated iPhone—representing a serious blow to the Company's bottom line. As a 14 result of Defendants' false statements, Omni Vision's stock traded at artificially inflated prices 15 during the Class Period, reaching a closing price high of $36.42 per share on May 26, 2011. 16 6. The market only began to learn of the Company's deception on August 25, 2011, 17 when Omni Vision announced results for its fiscal first quarter of 20122 and provided guidance 18 for the fiscal second quarter of 2012 that was well below analyst expectations. The Company 19 also disclosed delays in the production of its new 8-megapixel product line. Based on the 20 Company's disappointing guidance, analysts recognized that Omni Vision would not be the 21 exclusive producer of camera sensors for Apple's new, fifth generation iPhone—the iPhone 22 4S—set for release in the fall of 2011. 23 7. As a result of these revelations, Omni Vision's stock price declined $7.55 per 24 share, or 30.4 percent, to close at $17.27 per share on August 26, 2011 on extraordinary trading 25 volume. 26 1 27 IHS is an information company with experts in energy, economics, geopolitical risk, sustainability, and supply chain management. 28 2 OmniVision's fiscal year runs from May 1 through April 30. CLASS ACTION COMPLAINT I Case5:11-cv-05235-RMW Document1 Filed10/26/11 Page4 of 24 1 8. The market's fears were confirmed when, on October 14, 2011, the iPhone 4S 2 became available for sale and for dissection. Based on a logo stamped on the inside of the 3 sensor, experts determined that Sony—and not Omni Vision—had supplied the camera sensor 4 for the iPhone 4S. 5 9. In reaction to this news, Omni Vision's stock fell $1.65 per share, or 9.3 percent, 6 to close at $15.95 per share on October 14, 2011 on high trading volume. 7 10. Although Omni Vision may still have provided some sensor components to Apple 8 for the iPhone 4S, "the fact remains that Omni Vision's former stranglehold on this product line 9 has been broken." Anders Bylund, The iPhone Camera Mystery - Solved!, Motley Fool, Oct. 10 14, 2011. 11 11. The true facts, which were known by the Defendants but concealed from the 12 investing public during the Class Period, were as follows: 13 (a) Omni Vision knew well in advance of May 26, 2011 that it had lost its 14 exclusive supply contract for Apple iPhones to a competitor; 15 (b) competition was chipping away at the Company's prominent position in 16 the smartphone industry; 17 (c) delays in the development of its 8-megapixel product line were 18 threatening Omni Vision's prospects; and 19 (d) as a result of the foregoing, Omni Vision lacked a reasonable basis to state 20 that it was experiencing "strong growth in the handset market, because of the smartphone 21 category." Conference Call Transcript, May 26, 2011. 22 12. As a result of Defendants' false statements, Omni Vision common stock traded at 23 artificially inflated levels during the Class Period. However, as the truth about Omni Vision's 24 loss of its key contract with Apple was gradually revealed to investors, the Company's share 25 price dramatically declined. 26 27 28 3 CLASS ACTION COMPLAINT I Case5:11-cv-05235-RMW Document1 Filed10/26/11 Page5 of 24 1 JURISDICTION AND VENUE 2 13. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) 3 of the Exchange Act [15 U.S.C. §§ 78j(b) and 78t(a)] and Rule lOb-5 promulgated thereunder 4 by the SEC [17 C.F.R. § 240.1Ob-5]. 5 14. This Court has jurisdiction over the subject matter of this action pursuant to 6 Section 27 of the Exchange Act, 28 U.S.C. § 1331 [15 U.S.C. § 78a(a)]. 7 15. Venue is proper in this District pursuant to Section 27 of the Exchange Act, 28 8 U.S.C. § 1391(b), because many of the acts and practices complained of herein occurred in 9 substantial part in this District. Many of the acts and transactions that constitute the violations 10 of law complained of herein, including the dissemination to the public of untrue statements of 11 material facts, occurred in this District. 12 16. In connection with the acts and conduct alleged in this complaint, Defendants, 13 directly or indirectly, used the means and instrumentalities of interstate commerce, including, 14 but not limited to, the mails and interstate wire and telephone communications. 15 PARTIES 16 17. Plaintiff Woburn purchased the common stock of Omni Vision during the Class 17 Period, as set forth in the certification attached hereto, and was damaged as the result of 18 Defendants' wrongdoing as alleged in this complaint. 19 18. Defendant Omni Vision is a designer and manufacturer of image sensors that are 20 used in digital cameras to convert an optical image into electronic signals.