Opinion ID: 571326
Heading Depth: 5
Heading Rank: 1

Heading: Implied Growth

Text: 41 The challenged statements do not imply any comparison between the rate of past and future growth. They simply report past performance and assert specific limited predictions for the future. 42 Moreover, the market clearly understood that Convergent could not maintain the growth it had enjoyed in the past. In Apple Computer, we noted that, in a fraud on the market case, see Basic Inc. v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988), an omission is materially misleading only if the information has not already entered the market. If the market has become aware of the allegedly concealed information, the facts allegedly omitted by the defendant would already be reflected in the stock's price and the market will not be misled. Apple Computer, 886 F.2d at 1114. We concluded: [I]n a fraud on the market case, the defendant's failure to disclose material information may be excused where that information has been made credibly available to the market by other sources. Id. at 1115. 43 The market clearly knew demand for the AWS/IWS workstation would decrease as Convergent began to make NGEN available to its customers. As a general matter, investors know of the risk of obsolescence posed by older products forced to compete with more advanced rivals. See, e.g., In re Seagate Technology II Sec. Litig., [1989 Tr. Binder] Fed.Sec.L.Rep. (CCH) p 94,502 at 93,202, 1989 WL 222969 (N.D.Cal.1989) (technical obsolescence of computer [equipment] in a field marked by rapid technological advances is information within the public domain ...) 44 More specifically, securities analysts knew that NGEN posed just such a risk to sales of the AWS/IWS workstation. As early as February 1983, analysts reported the major product transition on the horizon, and noted that [i]n anticipation of the next generation of products, it is possible that ... major new customers may defer taking delivery of current products in favor of the new line. (Robertson, Colman, Stephens & Woodman's Feb. 3, 1983 research report at 12). Additional information on this situation was reported to the market after the March Prospectus: [A]s Convergent introduces and readies new products, customers will prolong the decision-making procedure for ordering the current workstations.... (Woodman, Kirkpatrick & Gilbreath's May 6, 1983 research report at 4). Other analysts echoed this refrain: [T]he product cycle of the current line of workstations is beginning to crest ... new workstation customers will want to wait for NGEN to be available in quantity ... current customers probably will start to work down their IWS/AWS inventories in anticipation of volume availability of N-GEN early next year. (Cowen Institutional Services' May 23, 1983 research report at 3). 45 In all, the district court considered more than 60 analyst reports and articles in the trade and financial press discussing Convergent's prospects for 1983. There can be no doubt that the market was aware AWS/IWS demand would not increase at the same rate it had in the past. 46