WatchGuard Technologies, Inc. NASD: WRGD

A class action has been commenced in the United States District Court for the Western District of Washington on behalf of purchasers of WatchGuard Technologies, Inc. ("WatchGuard") (NASDAQ:WGRD) common stock during the period between February 12, 2004 and March 15, 2005 (the "Class Period").

The complaint charges WatchGuard and certain of its officers and directors with violations of the Securities Exchange Act of 1934. WatchGuard provides Internet security solutions designed to protect small to medium-sized enterprises that use the Internet for e-commerce and secure communications.

The complaint alleges that during the Class Period, defendants caused WatchGuard's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, the Company's FY 2004 revenues were overstated.

On March 15, 2005, the Company announced that it was delaying its Q4 2004 and FY 2004 earnings call, would file a Notification of Late Filing with the SEC with respect to its annual report on Form 10-K and that it was restating its financial results for FY 2004. On this news, the stock fell below $3 per share.

According to the complaint, the true facts, which were known by the defendants during the Class Period but concealed from the investing public, were as follows: (a) the Company's Q1-Q3 2004 reported financial results were materially false and misleading due to: (i) inaccurate income statement classification of early pay incentive discounts taken by customers; (ii) under-accrual of customer rebate obligations; and (iii) timing of revenue recognition associated with specific products and services (resulting from an overstatement of product revenue and an understatement of deferred revenue); (b) the Company's February 12, 2004 projections were materially false and misleading; (c) the functionality and value of the Company's "Firebox X" product was grossly overstated and this product did not materially or accurately improve the Company's gross margins, streamline the Company's management or otherwise reduce its reliance on custom components; and (d) contrary to defendants' statements, the Firebox X was not tracking as defendants claimed.

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.