The different law firms cite the fall in share price since GTT revealed its challenges with integrating Interoute, and the fact that Interoute had shifted to a different marketing position before GTT took it over.
A week ago GTT’s CEO Rick Calder (pictured) said the company is planning to sell assets to cut its debts of $3.2 billion. The company’s share price closed yesterday at $7.96, compared with a high of $42.89 in April, but better than $4.90 a week ago. The company’s market cap is now $448 million, a fraction of the price it paid for Interoute.
The actions are coming from Pomerantz, a law firm that is also working on cases involving Alphabet, the owner of Google, PayPal and Qualcomm; Rosen, which is also working on a securities case on Uber; and Gross.
Rosen says: “a class action lawsuit has already been filed”, and is looking for lead plaintiffs. Investors wanting to serve as lead plaintiff, “must move the court” before the end of September.
Gross claims that, after the close of the Interoute deal, “there were delays in migrating Interoute’s legacy systems and processes into GTT’s client management database system”
The firm claims that “Interoute had made a strategic priority shift to sell cloud services”, and alleges that “a material percentage of the Interoute sales representatives were not productive at selling GTT’s core cloud networking services”. GTT “allowed underperforming sales representatives to remain at Interoute”, the firm claims.
Pomerantz quotes analysts at Craig-Hallum Capital Group saying GTT “is in the midst of altering its DNA, which had been largely built of growth via acquisitions, a process that has been challenged by debt levels and recent integration issues”. It adds that Craig-Hallum said that GTT is now trying to “rebuild its organic growth platform” by hiring a new salesforce.
Rosen, which makes similar points, says that “when the true details entered the market, the lawsuit claims that investors suffered damages”.
Capacity will be interviewing Calder in the August/September issue of the magazine, out later this month.
