-- which have fallen more than 25% since the company issued an earnings warning last week -- were off another 2.6% on Thursday after two law firms filed class-action lawsuits against the slot-machine maker.
The law offices of Charles Piven, a Maryland firm, and Lerach Coughlin Stoia & Robbins, a San Diego-based one, separately filed class-action lawsuits against Alliance in the U.S. District Court of Nevada, alleging the company issued a series of materially false statements that artificially inflated its share price. Investors who held, acquired or sold shares between Jan. 15 and June 7 are eligible to participate in both lawsuits.
In reaction to the news, shares of Alliance dropped 42 cents to $15.55, not far from their 52-week-low of $15.21.
The complaint from Lerach Coughlin Stoia & Robbins alleges that Alliance took advantage of its inflated stock price at the expense of investors. According to the complaint, the law firm said Alliance allowed certain executives to sell $3.6 million in shares whose value had been inflated by misleading public information.
On June 8, Alliance lowered earnings guidance citing delays in regulatory approval for gaming in New York and California, rising research and development expenses, and lower yields for some of its machines. Instead of $1.04 a share, the company said it expected to earn between 96 cents and $1 a share in 2004 vs. the $1.05 a share expected by Wall Street. In 2005, Alliance said it expected to earn between $1.20 and $1.30 a share, a far cry from the $1.43 expected by Wall Street.
"The defendants actively concealed from the public that the company was experiencing massive problems
and delays associated with the company's wide area progressive games in Nevada due to regulatory hold-ups," said Lerach Coughlin Stoia & Robbins, in a statement, calling the company's previous earnings guidance "grossly inflated."
Calls to Alliance Gaming for comment were not returned by press time.