Ditech Communications Corp. NASD: DITC

A class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of purchasers of the publicly traded securities of Ditech Communications Corp. ("Ditech" or the "Company") between August 24, 2004 and May 26, 2005, inclusive (the "Class Period").

The complaint charges Ditech and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Ditech is a Mountain View-based designer and marketer of telecommunications equipment and provides network operators with echo cancellation and voice processing systems. According to the complaint, defendants failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: The complaint alleges that defendants' Class Period representations regarding Ditech were materially false and misleading when made for the following reasons: (1) that the highly-touted Voice Quality Assurance ("VQA") orders was a huge disappointment because VQA orders were not as secured as defendants represented because the purported new clients were under no obligation to purchase Ditech's services; thus, Ditech's positive statements about its VQA success were lacking in any reasonable basis when made; (2) that the Sprint/Nextel merger would not be a positive development for Ditech; and (3) that the Sprint/Nextel merger presented a serious threat to Ditech's business because it was foreseeable that Ditech would experience a shortfall in revenue received from Nextel because of the merger.

On November 3, 2004, Ditech issued a press release announcing poor second quarter results due to a "delay" in shipping the highly-touted VQA orders from Asia and weaker domestic demand for wireless products. On November 4, 2004, the price of Ditech stock dropped $5.69 per share, or 25.53 percent, to $16.60 per share, on unusually heavy trading volume. On May 26, 2005, Ditech announced that orders from Nextel declined substantially as a result of the Nextel/Sprint merger, and would continue to do so. On news of this, shares of Ditech, on May 27, 2005, fell $4.80 per share or 38.13 percent to close at $7.79 per share on unusually heavy trading volume.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.