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Securities Sleuth: Problems at AmerisourceBergen Corp

Mark McNair
0 Comments|May 30, 2007

DEA suspends distribution license.

DEA suspends distribution license.

On April 24, 2007, AmerisourceBergen Corp (NYSE: ABC, BullBoards) disclosed that the U.S. Drug Enforcement Administration (DEA) had temporarily suspended its Orland, Florida Distribution Center's license to distribute DEA-controlled substances and listed chemicals. Specifically, the DEA believed that the cough suppressant and painkiller hydrocodone was improperly sold to four Internet pharmacies. The DEA asserted that AmerisourceBergen did not maintain effective controls against the diversion of controlled substances, specifically hydrocodone, to four internet pharmacies from January 1, 2006 to January 31, 2007.

It appears that investors who purchased AmerisourceBergen Corp. shares between January 1, 2006 and April 24, 2007 may be affected.

IPO Troubles for Allot Communications Investors

In its Registration Statement and Prospectus, Allot Communications Ltd. (NASDAQ:ALLT, BullBoards) represented that it would achieve its goal of becoming the leader in its industry through its ability to market and sell its products to end-customers through its channel partners. In fact, it now appears that at the time of the IPO, Allot was experiencing declining sales in its indirect distribution channels, such as enterprise, education and smaller ISP customers, in North America.

Specifically, in February 2006, Allot represented to investors that the company expected net revenues for the first quarter of 2007, which is traditionally slow in its sector, to be similar to the revenue level for fourth quarter 2006, with growth to resume in the second quarter of 2007 and continue through the remainder of the year. It expected earnings per diluted share for the first quarter of 2007 to be similar to the fourth quarter of 2006. For the fiscal year 2007, the Allot anticipated net revenue in the range of $43-$47 million, with earnings per diluted share, excluding the effect of share-based compensation, of between 27 and 33 cents per share.

Then, on April 2, 2007, Allot issued a press release announcing that revenues and earnings for the first quarter of 2007 and the 2007 fiscal year would be materially lower than its previous guidance. Allot explained that "weakness in sales from some of the company's distributors, principally in the Americas, which are focused on sales to enterprise, education, and smaller ISPs, had resulted in lower than expected revenues."

In response to the company's revised guidance, on April 2, 2007, the price of Allot stock declined from $9.15 per share to $7.11 per share - approximately 40% below the IPO price - on heavier than usual volume.

Investors who purchased the common stock of Allot pursuant to the company's initial public offering on or about November 15, 2006 may be affected..

Mark McNair is an attorney in private practice who represents investors in securities litigation and was formerly an attorney at the Securities and Exchange Commission. For additional information, go to

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