Ashton-Tate Settles Suits by Shareholders

Ashton-Tate Co. said Thursday that it has agreed to settle a series of shareholder lawsuits stemming from its 1989 announcement that it continued to sell its computer software despite knowing that distributors were accumulating large unsold inventories.

Terms of the tentative agreement were not revealed. However, the Torrance-based company took an $8.5-million charge against its earnings in the final quarter of 1990 to cover the cost of the litigation and its settlement.

Several lawsuits were filed against Ashton-Tate in 1989 and 1990 after revelations that the company had engaged in “channel stuffing.” Under this practice, common among software publishers until Ashton-Tate’s problems surfaced, companies would continue to log sales of their products by selling to wholesalers even though wholesalers were not selling equal quantities of the products.

In early 1989, Ashton-Tate announced that it had engaged in the practice and said it would stop shipping to distributors until their inventories were depleted. In the two years after the announcement, the company lost about $50 million and its stock plummeted in value.