An investigation on behalf of investors in Rosetta Stone Inc. (NYSE:RST) over possible violations of Federal Securities Laws by Rosetta Stone in concerning certain statements was announced.

The investigation by a law firm focuses on for potential violations of the federal securities laws by Rosetta Stone Inc. in connection with certain statements regarding its financial performance. Rosetta Stones 12months Total Revenue went from $91.57million in 2006 to $352.27million in 2009. While in 2006 Rosetta Stone Inc. had to report a Net Loss of $15.17million, its Net Income increased to $13.36million in 2009. For the first three quarters in 2010 Rosetta Stone Inc. reported a combined $184.59million with a combined nine months Net Income of $8.31million.
Shares of Rosetta Stone Inc. fell from over $20 on Feb17 to under $15 during Feb 25 after Rosetta Stone announced on February 18, 2011, that its financial performance for the fourth quarter of 2010 would be below its previously announced guidance provided in November 2010. Specifically, Rosetta Stone Inc. stated in the preliminary Fourth Quarter 2010 results, among other things, that Rosetta Stone expects to report total revenue of approximately $74.2 million on sales bookings of approximately $81.8 million, compared to previously issued guidance of $76 to $81 million of total revenue and $82 to $88 million of sales bookings.

Rosetta Stone attributed the guidance miss to lower-than-expected sales from the US consumer market, exacerbated by the financial impact of the recently-announced Chapter 11 bankruptcy reorganization of Borders Group, Inc. The February 18, 2011 press release states, in part, as follows: Tom Adams, CEO of Rosetta Stone, said, Despite record sales of Rosetta Stone Version 4 TOTALe on both Black Friday and Cyber Monday, our sales to US consumers for the full quarter were below expectations. The bankruptcy of Borders Group, one of our global retail partners, also negatively affected our revenue and earnings for the fourth quarter. . .