NEW YORK (TheStreet) -- Montage Technology Group (MONT) was falling 14.84% to $14.86 shortly after 2 p.m. on Friday as it continued to suffer from the effects of Gravity Research's claim on Thursday that Montage's reported revenue is false.
Gravity made the claim in a report posted on its website in which it also initiated a "strong sell" rating on the semiconductor company.
"We believe that Montage Technology Group Ltd. ("MONT") is committing fraud, and that MONT's actual revenue is significantly lower than MONT has reported to investors due to overwhelming evidence that MONT's largest distributor is nothing more than a shell company used to help fabricate MONT's financials," Gravity wrote in its report. "LQW Technology Company Limited ("LQW"), a Hong Kong entity which MONT claims accounted for 71% of its revenue in the first 9M of 2013 (up from 50% in 2012), is secretly 100% owned by Shanghai Montage Microelectronics Technology Co. Ltd. ("SMMT"), an undisclosed entity established by MONT and a MONT employee."
On Friday, Montage posted a response on its own website to Gravity's claim."The company believes that the allegations and accusations in the report lack merit and contain numerous errors of fact, misleading speculation and misinterpretation of events. Montage fully stands behind the integrity of its audited financial statements, which have been audited by its independent accountants, PricewaterhouseCoopers Zhong Tian LLP," the company wrote. "Montage also disclaims any suggestion that LQW Technology Company, an independent distributor of semiconductor products to the end customers of Montage and other technology companies, is an affiliate of Montage. Montage plans to release additional information refuting the allegations made by Gravity Research in due course. Montage is committed to providing full and accurate disclosure to investors and to preserving confidence in Montage's business, management, financial performance, operations and corporate structure." Must Read: SHAREHOLDER ALERT: Pomerantz Law Firm Investigates Claims On Behalf Of Investors Of Montage Technology Group Limited - MONT