In a recent class action complaint filed in the United States District Court for the Northern District of Illinois, Cambium Networks Corporation, along with its executives Atul Bhatnagar, Morgan Kurk, and Andrew Bronstein, faces allegations of federal securities law violations. The complaint was lodged by plaintiff Benjamin Hamby on May 22, 2024, representing himself and others similarly situated.
The lawsuit centers around claims that Cambium Networks and its executives made materially false and misleading statements about the company's financial health and business prospects. These statements allegedly led to significant losses for investors who purchased Cambium securities between May 8, 2023, and January 18, 2024. The complaint highlights several key events during this period where Cambium's stock price plummeted due to revelations about inventory issues and revenue shortfalls.
On August 1, 2023, Cambium reported a significant decline in second-quarter revenue by 23%, attributing it to higher channel inventories which reduced demand for their Enterprise products. This announcement led to a sharp drop in the company's share price by over 30% the following day. Further disclosures on October 4, 2023, revealed even more severe revenue shortfalls for the third quarter of that year. Cambium announced preliminary third-quarter revenues between $40 million and $45 million—far below their previous outlook of $62 million to $70 million—due to decreased orders and increased stock rotations from distributors. This news caused another steep decline in share prices by over 36%.
The situation worsened on January 18, 2024, when Cambium disclosed that fourth-quarter revenues were expected to be approximately $40 million compared to an earlier forecast of $45 million to $50 million. The company cited aggressive discounts offered to clear excess channel inventories as a primary reason for this shortfall. Following this disclosure, Cambium's stock fell by an additional 12%.
Throughout these periods of declining revenue and inventory issues, the plaintiff alleges that Cambium's executives failed to disclose critical information about the buildup of inventory in distribution channels and the likely need for aggressive discounting strategies. These omissions allegedly misled investors about the true state of the company's financial health.
As a result of these alleged misrepresentations and omissions, Hamby claims that he and other class members suffered significant financial losses. The plaintiffs are seeking compensatory damages for all affected investors who purchased Cambium securities during the specified period. They also request reimbursement for legal costs incurred during this litigation.
Representing Hamby are attorneys Marvin A. Miller and Lori A. Fanning from Miller Law LLC; Robert V. Prongay and Charles H. Linehan from Glancy Prongay & Murray LLP; as well as Corey D. Holzer from Holzer & Holzer LLC. The case is presided over under Case ID: 1:24-cv-04240.