On the heels of its third-quarter warning last week, Cisco Systems got word its shareholders had filed a class action lawsuit.

The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges Cisco manipulated customers by financing them, but made it contingent upon buying large amounts of Cisco products. It also alleges Cisco shipped defective or incomplete products, and that Cisco failed to adequately accrue for excess and overvalued inventory and uncollectable finance receivables, allowing Cisco to report record earnings each quarter.

"Defendants thus made positive but false statements about Cisco's products, financial results and business," increasing its stock prices, the lawsuit alleges.

"We have reviewed the lawsuit, and it is without merit," Cisco spokesman Steve Langdon told CEDaily. He would not comment further. He also would not comment on whether or not Cisco saw the lawsuit coming when it issued its warning, particularly given the number of similar lawsuits filed against others in the industry.

Attorneys for the shareholders, Milberg Weiss Bershad Hynes & Lerach LLP, were not as reticent as Cisco. Attorney David Walton told CEDaily that Cisco had "$400 billion in market cap loss and the company's stock declined dramatically and with a large amount of insider trading. Executives of Cisco sold a large amount of Cisco stock and it does look like a slowdown was evident to them based on other news stories we've seen."

Walton added that he didn't know if talk that the law firm had filed 40 such cases in the past 90 days was accurate, but, "It could be close. I just don't know."

The firm does, however, have a lengthy list of other current class-action lawsuits against companies such as Winstar Communications Inc., AT&T Corp., Adaptive Broadband Corp., Broadcom Corp., Covad Communications Group Inc. and Oracle Corp.