b'Throughout 2019, DXC reported consistently decliningstatements accompanied by meaningful cautionary growth. On May 23, 2019, DXC issued a press releaselanguage. The court further rejected plaintiffs announcing its first quarter 2019 earnings, stating thatcontention that DXCs $1 billion cost-cutting statements it achieved diluted earnings per share (EPS) of $4.35,were barred from safe harbor protection as mixed a 17% decline from the year before and disclosing thatstatements that both concerned present facts and revenues declined year-over-year. It also provided 2020looked to the future, again noting that plaintiffs revenue guidance of $20.7 billion$21.2 billion. Onfailed to allege that such statements were anything August 8, 2019, DXC issued a press release announcingmore than aspirational. The court next held that the its first quarter 2020 earnings, stating that EPS declinedcost-cutting statements were sufficiently accompanied 22% year-over-year and again revised downward itsby cautionary language clearly indicating layoffs were 2020 revenue targets by $500 million. On November 11,to be expected. 2019, DXC issued a press release announcing its secondNext, with respect to statements touting net synergies quarter 2020 earnings, noting a further diluted EPS andand strategic and financial benefits, the court agreed decline in revenues year-over-year by 3.2%, and furtherwith plaintiffs that such representations, when read in reducing 2020 revenue guidance from context, were tied to the disclosure of the anticipated $20.2 billion$20.7 billion to $19.5 billion$19.8 billion.$1 billion cost-reduction target, and therefore, were That same day, DXCs new CEO acknowledged deliverynot mere expressions of corporate optimism, but still and personnel retention problems.held the statements were aspirational and inactionable By September 2019, DXC stock was trading at $32.70opinions. With respect to statements detailing DXCs per share, a nearly 45% decline from the $59 price ofturnaround plan that would align [DXCs] costs with its DXC stock at the time of the merger. Investors filedrevenue trajectory and included initiatives to improve a putative class action lawsuit against DXC and itsexecution in sales performance and accountability, directors and officers, and HPE and its general counselthe court agreed with defendants that the challenged and CFO alleging violations of Sections 11 and 15 ofstatements were inactionable vague descriptions of the 1933 Act, based on claims that defendants failedthe companys plans that were incapable of objective to disclose facts and risks that existed at the time ofverification. The court also held that representations the merger related to DXCs workforce optimizationin the Registration Statement specifying efforts to hire plan as to the extent of workforce reductions and itsand retain highly skilled employees were adequately eventual detrimental impact on customer satisfactionpaired with warnings to investors of the risk to financial and broader revenue growth. Defendants movedperformance, should the company fail to meet to dismiss the amended complaint, which the courtthese employment goals. The court further held that granted, with leave to amend, finding plaintiffs failed todisclosures warning of eventualities related to reduction plead that DXCs statements regarding its turnaroundin workforce not expected to occur until years later plan and target in cost cuts were inactionable puffery. properly disclosed the state of affairs as they were at The court held that plaintiffs failed to sufficiently pleadthe timethat DXC planned to optimize its workforce their Section 11 claim based on alleged inconsistenciesand eliminate duplicative roles. between the Registration Statement and internalFinally, the court held that plaintiffs allegations for cost-cutting goalsrejecting plaintiffs theory thatviolations of Items 303 or 503 of SEC Regulation S-K the Registration Statement was false and misleadingsimilarly failed. The court held that plaintiffs failed to allege because it stated that DXC intended to cut $1 billionfacts sufficient to lead to a reasonable inference that the in costs when in reality it intended to cut $2.7 billionundisclosed $2.7 billion internal cost-reduction target in costs. The court agreed with defendants that, evenwas achieved, or meant to be achieved, in the first year assuming DXC internally set a goal of cutting costs byafter the merger was concluded, and thus failed to allege $2.7 billion, such a goal was merely aspirational andthat this was a known trend, uncertainty, or risk factor that, more importantly, plaintiffs failed to allege thatthat required disclosure in the Registration Statement. DXC had actually achieved this alleged internal targetBecause none of plaintiffs alleged misstatements or or cut costs in excess of the disclosed $1 billion.omissions were actionable, the court dismissed plaintiffs The court also rejected plaintiffs argument that,Section 15 claim for failure of a requisite underlying because the merger involved issuance of brandprimary violation of the securities law. new, never-before publicly traded security of aOn September 25, 2020, plaintiffs filed a second new company, it should be treated as an IPOaamended complaint, which defendants moved to determination which would have otherwise precludeddismiss on November 12, 2020. The motion is set defendants protection under the PSLRA safe harborfor hearing on April 29, 2021. provisions precluding liability for forward-looking 33'