Full opinion text
ORDER RULING ON PENDING MOTIONS; [Doc. Nos. 173, 194, 263, 308, 310, 336] DISMISSING CASE WITH PREJUDICE MICHAEL M. ANELLO, District Judge. Currently pending before the Court are four summary judgment motions and several evidentiary motions in these consolidated securities fraud cases against Defendants REMEC, Inc., Ronald E. Ragland, and Winston E. Hickman. In sum, for the reasons stated below, and because the Court finds that Defendants are entitled to summary judgment on the element of scienter, judgment shall be entered in favor of Defendants and the case shall be dismissed with prejudice. 1. Background A. Basic Facts Defendant REMEC, Inc. (“REMEC”) designed and manufactured “high frequency subsystems used in the transmission of voice, video and data traffic over wireless communications networks and in space and defense electronics applications.” FAC ¶2. This action concerns REMEC’s Commercial segment (also known as the Wireless Systems division). Defendant Ronald Ragland, an engineer, founded REMEC in 1983 and served as its Chief Executive Officer (“CEO”) and Chairman of the Board of Directors until February 2004. Ragland Decl. ¶¶ 3-4. In November 2003, REMEC purchased Paradigm Wireless Systems, Inc., and hired that company’s Chief Financial Officer (“CFO”) Winston Hickman to serve in that same position at REMEC. Hickman Decl. ¶ 4; Ragland Decl. ¶ 11. Plaintiffs accuse REMEC of materially overstating its financial results by failing to recognize millions of dollars in losses related to goodwill impairment. See e.g., FAC ¶¶ 3-6, 139-225. Although the heart of Plaintiffs’ case concerns impaired goodwill, Plaintiffs allege REMEC engaged in other deceptive accounting practices such as inflating revenue by overstating the value of excess, obsolete inventory and by failing to disclose significant internal control deficiencies. See e.g., FAC ¶¶ 8, 11, & 14. The FAC contains two causes of action. REMEC, Ragland, and Hickman are named in the first cause of action for securities fraud pursuant to § 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Plaintiffs’ second claim alleges control person liability against Ragland and Hickman under § 20 of the Securities Exchange Act of 1934. The Court certified a class of plaintiffs who purchased or otherwise acquired RE-MEC securities between September 8, 2003 and September 8, 2004. Fed.R.Civ.P. 23(a) & (b)(3); Order Granting Pis.’ Mo. for Class Certification. [Doc. No. 103.] B. Defining Goodwill Impairment Testing Plaintiffs’ case primarily involves an accounting method to test the value of goodwill, which is calculated and reported on a company’s financial statement. Goodwill is an intangible asset that reflects the “excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed.” Williams Decl. Ex. 1 at 105. In other words, goodwill, though it is an intangible asset, must be measured. If the value of the goodwill is “impaired,” the company must deduct or “write off’ that value on the balance sheet. When the value is positive, the company records goodwill as an asset. Williams Decl. Ex. 2 at 42 (FY02 Form 10-K at F-8 reports purchases of Solitra and Pacific Microwave Corp. and subsequent $17.7 million write-off associated with Pacific). Goodwill is customarily acquired when an existing company purchases another company. With each acquisition, goodwill is recorded on the company’s financial statement. In this case, Plaintiffs allege that REMEC pursued an aggressive strategy of buying companies and recording inflated goodwill values in a scheme to mask the true financial condition. See e.g., FAC ¶ 87. Under Ragland’s command, part of REMEC’s business strategy was to expand by buying other specialized technology companies that would complement REMEC’s product offerings. Williams Decl. Ex. 2 at 8-9 (FY02 Form 10-K at 6-7 describes strategy to pursue acquisitions); Williams Decl. Ex. 56 at 10 (FY03 Form 10-K). Beginning in 1999, RE-MEC’s Commercial unit acquired several companies. REMEC recorded the acquired goodwill as an asset on its financial statements in most of those transactions. For example, in November 2003, during the class period, REMEC bought Paradigm Wireless (Hickman’s former employer) and recorded $17 million on its financial statement as goodwill, or 81 % of the $21 million purchase price. See Pis.’ Opp. Br., Attachment 3; Fraser Decl. Ex. 4 at 1 (Hinkle mem. dated 2/19/04). Plaintiffs calculate that REMEC recorded goodwill totaling $55.9 million from the Commercial Wireless’s four main acquisitions (or 64% of the $87 million purchase prices). See Pis.’ Scienter Opp. Br., Attachment 3. As mentioned, companies must test the value of goodwill using generally accepted accounting procedures (“GAAP”). The Financial Accounting Standard (“FAS”) Board changed the rules governing the valuation of intangible assets in 2002. Under the prior rule, companies accounted for goodwill by amortizing the value over a period of years as a long-term asset. Brownlie Decl. Ex. D (FAS 121). The prior rule instructed companies to account for and disclose impaired goodwill “whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recovered.” Id. at 84. The statement of FAS 142 eliminated the prior method of amortizing goodwill. Williams Decl. Ex. 1. Instead, FAS 142 uses a two-step test to identify potential goodwill impairment and to measure the amount of loss. Id. at 12 (¶ 18). The first step compares the fair value of a reporting unit with its carrying value. Id. at 12-14 (¶¶ 19 & 23-25). If the fair value exceeds the carrying amount, goodwill is not impaired and the second step is not required. Id. at 12 (¶ 19). If the carrying amount exceeds its fair value, the second step is performed to measure the amount of impairment loss. Id. The second step “compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.” Id. at 13 (¶ 20). The accounting method to value goodwill involves predictions of future results and other uncertain variables. The language of FAS 142 states that it measures a “reasonable estimate of the value of goodwill.” Williams Decl. Ex. 1 at 12 & 108 (¶ 18 n. 13). “Unlike many other assets that are tested for impairment, goodwill does not have a set of cash flows uniquely associated with it. Instead, the cash flows associated with acquired goodwill usually are intermingled with those associated with internally generated goodwill and other assets because entities generally enter into business combinations to reduce costs and achieve synergies, which entails integrating the acquired entity with the acquiring entity.” Id. at 50 (App.B84); id. at 54 (App. B96 & B97); id. at 61-62 (App.B127) (“a goodwill impairment test by its very nature will include some level of imprecision”). As the definition states, goodwill measures amorphous concepts like the “synergy” created by merging two companies. Goodwill is measured in large part on predictions, such as predictions of future sales and estimates of the cost savings that will be achieved by combining two entities (e.g., reductions in duplicative labor and facilities). The prediction of gross profit margin is central to Plaintiffs’ suit against REMEC. These types of business judgments should not be invalidated merely because, in hindsight, they proved wrong. FAS 142 also changed the timing of goodwill testing. It required companies to test the value of goodwill every fiscal year. In addition to the annual test, certain conditions “that would more likely than not reduce the fair value” of an acquisition could trigger a requirement to perform an interim test. Id. at 15 ¶ 28. REMEC implemented the new FAS 142 rule in early 2002 and first reported its compliance after its FY03 ended on January 31, 2003. See Williams Decl. Ex. 2 at 28; Katsell Supp. Decl. Ex A at 12 & 16. The first test conducted under the new rule is called the transitional test. RE-ME C’s transitional test applied “as of’ the beginning of REMEC’s fiscal year, and the company had six months to complete it. Williams Decl. Ex. 1 at 23 (¶ 55). The annual test must be conducted the “same time every year,” id. at 14 (¶ 26), and REMEC elected to measure goodwill impairment “as of’ the last business day of December. In its Securities and Exchange Commission (“SEC”) filings, REMEC told investors that it tested goodwill and found no impairment. See e.g., Williams Decl. Ex. 56 at 33 (FY03 Form 10-K at 27) (‘We did not recognize any goodwill impairment as a result of performing this annual test.”). Plaintiffs dispute the accuracy of those statements. Plaintiffs allege Defendants falsely assured the market it used assumptions that were “consistent with the plans and estimates that we use to manage the underlying business” to calculate its goodwill. FAC ¶¶ 5 & 151. Plaintiffs further allege that REMEC used unreasonable assumptions to test the goodwill and should have conducted interim goodwill impairment tests. FAC ¶¶ 9-10. Of particular importance to Plaintiffs’ case, REMEC assumed, for purposes of its annual impairment analyses in FY03 and FY04, that its gross profits in future years would range from a low of 24% to a high of 38%. Williams Decl. Ex. 56 at 33 (FY03 Form 10-K at 27); id. Ex. 5 at 25 (draft FY04 Form 10-K at 22). Plaintiffs emphasize that REMEC’s actual performance had been much worse: 7.1 % in FY02, 10.2% in FY03, and 12.3% in FY04. In short, Plaintiffs accuse REMEC of using numbers that crossed the line from optimism to manipulation. In reviewing the accounting claims at issue in this lawsuit, the Court bears in mind that measuring goodwill entails the exercise of professional judgment. See e.g.,. Katsell MSJ Decl. Ex. E (Minstein Dep. at 27); Regan Rebuttal Report at 12-15; Katsell Decl. to Mot. to Strike Ex. 2 at 8, 14, & 17 (hereinafter “Holder Rebuttal Report”). Professional judgment is involved in accounting for goodwill in general because it is an intangible asset and specifically because it depends upon predictions of future results. See e.g., Williams Decl. Ex. 1 at 6 (the two-step process “begins with an estimation of the fair value of a reporting unit”); id. (¶ 18 n. 13) (“The fair value of goodwill can be measured only as a residual and cannot be measured directly.”); id. at 13 (¶ 23) (defining fair value as the amount for which willing parties could buy or sell the asset); id. at 67 (App.B153) (allowing “latitude” to measure fair value). “Accountants have long recognized that ‘generally accepted accounting principles’ are far from being a canonical set of rules that will ensure identical accounting treatment of identical transactions. ‘Generally accepted accounting principles,’ rather, tolerate a range of ‘reasonable’ treatments, leaving the choice among alternatives to management.” Thor Power Tool Co. v. C.I.R., 439 U.S. 522, 544, 99 S.Ct. 773, 58 L.Ed.2d 785 (1979); In re Cirrus Logic Sec. Litig., 946 F.Supp. 1446, 1457 (N.D.Cal.1996). FAS 142 also gives management discretion to make reasonable estimates in the totality of circumstances. See e.g., Williams Decl. Ex. 1 (“some consideration should be given to industry trends.”). This is not to say that goodwill is wholly subjective. Companies are permitted to select an appropriate valuation method, and REMEC selected the discounted cash flow method. Id. at 67 (App.B150-52). “[WJhen cash flows are used to estimate fair value, those cash flows should be consistent with the most recent budgets and plans approved by management.” Id. (App. B 152). FAS 142 also requires that “cash flow estimates shall be based on reasonable and supportable assumptions.” Id. at 14 (FAS ¶ 24); id. at 95 (App. E ¶ 41a). With these principles in mind, the Court turns to the pending motions. II. Summary Judgment Standard Summary judgment is appropriate when the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Plaintiffs bear the burden of proving these elements: (1) a material (2) misrepresentation of fact; (3) scienter; (4) connection with the purchase or sale of a security; (5) reliance (also known as transaction causation); (6) loss causation; and (7) economic loss. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341-42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005); Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir.1996). Courts may analyze falsity and scienter together, even though they are separate elements, because they generally depend upon the same set of facts. See In re Daou Systems, Inc. Sec. Litig., 411 F.3d 1006, 1015 (9th Cir.2005). Plaintiffs must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex, 477 U.S. at 325, 106 S.Ct. 2548. The Court must construe the evidence and draw justifiable inferences in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita, 475 U.S. at 587, 106 S.Ct. 1348. “This rule does not require that there be no factual dispute. ‘[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.’ ” Hanon, 976 F.2d at 500 (quoting Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505). “Where material factual disputes exist, the court must allow a jury to resolve the factual disputes.” Provenz, 102 F.3d at 1483. III. Cross Motions for Summary Judgment on False or Misleading Statements The parties filed cross motions to determine whether or not certain statements were false or misleading as a matter of law. In a securities fraud case, “Pliability depend[s] on the plaintiffs’ success in demonstrating that one of the statements made by the company was actually false or misleading.” In re Convergent Tech. Sec. Litig., 948 F.2d 507, 512 (9th Cir.1991). “Thus, to prevail, the plaintiffs must demonstrate that a particular statement, when read in light of all the information then available to the market, or a failure to disclose particular information, conveyed a false or misleading impression.” Id.; 15 U.S.C. § 78a (“to make any untrue statement of material fact or to omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading”). “The fact that an allegedly fraudulent statement and a later statement are different does not necessarily” establish falsity because the statement must be evaluated at the time it was made and not by hindsight. In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1549 (9th Cir.1994) (prePrivate Securities Litigation Reform Act of 1995) (“PSLRA”). The Ninth Circuit cautioned that the application of “flexible accounting concepts ... do not always (or perhaps ever) yield a single correct figure.” Id. In order to create a triable issue of fact on falsity, Plaintiffs must demonstrate more than a “difference between two permissible judgments, but rather [must present facts explaining that the statement is] the result of a falsehood.” Id. A. Plaintiffs’Accounting Expert Witnesses’ Opinions are Admissible under Daubert Plaintiffs rely on expert testimony from two CPAs as evidence that REMEC’s goodwill impairment tests were manipulated by using unrealistic assumptions. Defendants move to exclude the expert opinions of Andrew G. Minstein and D. Paul Regan. Fed.R.Evid. 702. Defendants argue that Minstein and Regan did not use a reliable methodology in forming their opinions, but simply substituted their own subjective judgments. In Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the Supreme Court directed trial judges to exercise their “gatekeeping responsibility” to ensure that expert testimony be “not only relevant, but reliable.” The Supreme Court gave examples of factors to determine reliability, but its list is not exclusive because the test is flexible to fit the subject matter. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141, 150, 153, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). “[N]othing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence which is connected to existing data only by the ipse dixit of the expert.” G.E., Inc. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). The proponent of the witness bears the burden of establishing an expert’s qualifications, reliability, and helpfulness. Having reviewed the expert reports and declarations, the Court overrules Defendants’ objections because their arguments bear on the weight of the evidence. 1. Minstein Expert Report Defendants complain that Minstein’s analysis is conclusory. Defs.’ Mot. to Strike at 3-4 (“Minstein simply substitutes his judgment for that of REMEC’s, and concludes that REMEC was wrong.”); Daubert, 509 U.S. at 590, 113 S.Ct. 2786 (expert’s opinion cannot be based upon subjective belief or unsupported speculation). The Court overrules the objections as they pertain to the FY03 and FY04 annual impairment tests, but sustains the objections to his conclusory opinions as to whether REMEC should have performed interim tests. a) FY03 and FY04 Goodwill Impairment Tests The Court finds that Minstein’s expert opinions are sufficiently reliable to be admissible evidence because his declaration elucidates the basis of his conclusions. His expert report supports Plaintiffs’ claims that REMEC made false and misleading statements that its goodwill was not impaired in its Form 10-K for FY03 and FY04. Minstein concludes that REMEC’s analysis of goodwill impairment was conducted in violation of GAAP in both FY03 and FY04. See e.g., Minstein Decl. ¶¶ 24(b), 26-29, & 31-33. Minstein opines that the assumptions REMEC used to project gross profit margins and operating expenses as a percentage of revenue were inappropriate and indefensible. Minstein bases his opinion on factors such as RE-MEC’s low performance in recent years, continuing pressure from competitors, the slow progress of moving manufacturing operations from Finland to China, and poor selection of guideline companies. Minstein Report at 4-10 & 17-21. Min-stein notes that these conditions existed both when REMEC reported goodwill and when it took the writeoff. Minstein Decl. ¶ 6. He points to facts that support his conclusion, such as the small margins in the FY03 and FY04 tests, the small percentage of the calculated fair value in contrast to the carrying value, and the impact that small changes had on REMEC’s continued losses. Id. ¶ 24(b). Minstein also explains how he chose the assumptions he used in his computer model. Minstein uses actual data from Andrew Corporation — one of the guideline companies that REMEC used. See e.g., Williams Decl. Ex. 12 at 8 (listing Andrew as guideline company). Although Andrew consistently outperformed REMEC, Min-stein states that he gave REMEC the benefit of doubt that it could achieve similar numbers. Minstein Decl. ¶¶ 19, 21(d), & 41(b), (c), & (e). He applied an across-the-board 10% revenue growth rate in each of the last eight years of the projection based on “industry and company expectations.” Minstein Report at 19 & Ex. 18; Minstein Decl. ¶¶ 21(a) & 41(a). He explains how he arrived at a gross profit margin of 30% after allowing for a 15% margin in the first year. Minstein Report at 19 & Ex. 19; Minstein Decl. ¶¶ 21(b) & 41(b). He also contrasts the different gross profit margin assumptions that RE-MEC used in two tests in the same year. Minstein Decl. ¶ 4. In sum, the Court concludes Minstein explains the steps of his analysis and justifies the numbers he used; consequently, his expert opinion is admissible. Defendants point to various weaknesses in Minstein’s analysis. These include such matters as (1) his professional judgment (e.g., his assertion that “Powerwave is the better indicator of expected REMEC commereial performance,” Minstein Report at 17; Minstein Decl. ¶ 5); (2) his interpretation of the governing accounting standard (e.g., “In my opinion Defendants did not comply with requirements of FAS 142 because they ... did not base their FY03 goodwill impairment assumptions on historical performance, which is the best available evidence because company budgets and forecasts historically were not achieved,” Minstein Decl. ¶ 10(b)); id. ¶ 27(b) (same for FY04); id. ¶ 10(e) (RE-MEC “improperly excluded the best comparison company”); (3) his heavy reliance on historical performance and the hindsight of actual performance as compared to predictions of future improvement (e.g., id. ¶ 16(b)-(e)); id. ¶ 33(d) (“Actual performance for FY04 was even worse than the forecasted amounts”); id. ¶¶ 36 & 38 (relying on historical performance of guideline company); and (4) the accuracy of certain factual assertions and calculations (e.g., “forecast results were directed by management,” Minstein Report at 20; REMEC’s budgets “must be regarded as inherently unreliable,” id. at 21; “REMEC’s goodwill impairment test was based on unrealistic and unachievable budgets,” Minstein Decl. ¶¶ 12 & 16(b)). Defendants may explore these perceived deficiencies through cross examination. Primiano v. Cook, 598 F.3d 558, 564 (9th Cir.2010) (“Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.”) (citing Daubert, 509 U.S. at 596, 113 S.Ct. 2786); e.g., Robinson v. Hartzell Propeller, Inc., 326 F.Supp.2d 631, 649 (E.D.Pa.2004) (determination of weight and sufficiency of expert evidence is “sole province of the jury”). For the present purpose of ruling on the summary judgment motion, the Court OVERRULES Defendants’ laundry list of evidentiary objections to Minstein’s report. Defs.’ Evid. Obj. [Doc. No. 339-2], b) Interim Tests The Court SUSTAINS Defendants’ objection to Minstein’s expert opinion on whether REMEC failed to conduct necessary interim tests between its annual tests. Minstein concludes that REMEC should have conducted interim tests for the quarters ending May 2, 2003 and October 31, 2003. Minstein Report at 3,15-17. FAS 142 provides that “[gjoodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.” Williams Decl. Ex. 1 (FAS 142 ¶ 28). The standard gives examples of such events or circumstances, such as “a loss of key personnel.” The Court agrees with Defendants that Minstein does not explain his reasons and does not conduct any analysis under the standard — he simply jumps to conclusions. Minstein identifies the events that, in his opinion, triggered the duty to conduct an interim test. For example, Minstein claims that the loss of key personnel, namely Morash as CFO in September 2003 and Ragland as CEO in February 2004, qualify as triggering events. Minstein Decl. ¶ 22-24 (interim); Minstein Report at 16. What is lacking, however, is any analysis of the language in FAS 142 that states the event “would more likely than not reduce the fair value of a reporting unit below its carrying amount.” When asked about his analysis at his deposition, Minstein admitted that he had not performed an impairment test to demonstrate that the identified events would have reduced the fair value of the Commercial wireless segment below its carrying value. Katsell MSJ Decl. Ex. E (Minstein Dep. at 302-03). As such, his opinion rests on his subjective belief or unsupported speculation. Daubert, 509 U.S. at 590, 113 S.Ct. 2786. c) Scienter The Court agrees with Defendants that Minstein exceeded his role as an expert witness on accounting when he gave his opinions about the Defendants’ mental state. The Court discusses that issue in the scienter section below. 2. Regan Rebuttal Report Plaintiffs offer Regan’s expert report to rebut the report by Defendant’s expert William W. Holder. Rogers Decl. Ex. 1 (Regan Decl. Ex. A.) (hereinafter “Regan Rebuttal Report”). [Doc. No. 252.] Defendants first contend the rebuttal report was untimely filed in relation to Plaintiffs’ opposition brief. This procedural objection is overruled. The pretrial schedule was extended to allow the parties to exchange the rebuttal reports on February 3, 2009. Plaintiffs submitted the report as soon as it was available on February 9, 2009. The Court observes that Defendants filed their expert’s rebuttal report on the same day. [Doc. No. 254.] The Court prefers to resolve summary judgment motions on a complete record. Next, Defendants argue Regan’s report exceeds the scope of a proper rebuttal brief because Regan conducted his own goodwill impairment analysis whereas Defendants’ expert Holder did not undertake that task. The Court OVERRULES this objection because Regan’s analysis contradicts Holder’s opinion on the same subject matter, specifically, whether RE-MEC used assumptions, estimates, and forecasts to evaluate goodwill that complied with GAAP. Compare Regan Rebuttal Report at 17-26 with Holder Rebuttal Report at 8-9 & 13-18. Regan also addressed Holder’s reliance on the Ernst & Young audit work papers and the analysis by the successor Certified Public Accountant (“CPA”). Id. Defendants’ substantive argument is that Regan ignored the relevant legal standard and completely failed to explain or justify how or why the assumptions he made are more appropriate than the assumptions REMEC used to value goodwill. The Court OVERRULES the objection because the allegations are belied by the report itself. Regan explains precisely why he believes REMEC used inappropriate assumptions and then supports his reasons for selecting alternative inputs. See e.g., Regan Rebuttal Report at 17-25. As the Ninth Circuit observed on remand from the Supreme Court, “the test of Daubert is not the correctness of the expert’s conclusions but the soundness of his methodology.” Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1318 (9th Cir.1995). Defendants may make use of the traditional methods of testing the weight of an expert’s opinion by vigorous cross examination and presentation of contrary evidence. Daubert, 509 U.S. at 596, 113 S.Ct. 2786. For the present purpose of ruling on the summary judgment motion, the Court OVERRULES Defendants’ laundry list of evidentiary objections to Regan’s report. Defs.’ Evid. Obj. [Doc. No. 339], B. Statements Before and During Class Period The cross motions for summary judgment involve these statements: (1) RE-MEC performed a goodwill impairment test in' February 2002; (2) REMEC’s goodwill for FY03 was not impaired (particularly the gross profit margin assumptions); (3) REMEC would soon return to profitability; (4) Ragland “retired” as CEO; (5) the “China Ramp” was “on plan”; and (6) other accounting practices and financial performance. A corporate officer who, on behalf of corporation, signs the financial statement “makes” a statement for potential liability under the federal securities laws. Howard v. Everex Sys. Inc., 228 F.3d 1057, 1061-62 (9th Cir.2000). In this case, Ragland was CEO at the start of the class period, but he left REMEC in the middle of it. Hickman was not employed by RE-MEC at the start of the class period, but remained through the end of it. Because the two executives had different terms, it is important to pay attention to the date of the statements contained in the SEC filings. 1. Factual Issues Remain on the Falsity of the Statement that REMEC conducted a Transitional Goodwill Impairment Test as of February 1, 2002 Plaintiffs contend that Defendants falsely told investors that REMEC “performed its transitional goodwill impairment test as of February 1, 2002.” Fraser Deck Ex. 9 at 12 (Q3 04 Form 10-Q filed Dee. 13, 2003) (“REMEC did not recognize any goodwill impairment as a result of performing this transitional test.”); accord Williams Deck Ex. 56 at 33 (FY03 Form 10-K at 27) (R887571) (same, pre-class statement). They seek summary adjudication on this issue. Pis.’ MSJ Br. at 17-20. Defendants counter that the company did perform that transitional test, which was the first test conducted under the new standard in FAS 142, but cannot locate the actual document. Plaintiffs argue that the fact that REMEC cannot produce, when ordered to do so, the 2002 test demonstrates that it does not exist. See Order Granting in part and Denying in part Pis.’ Mot. Compel Production of Docs, and Interrog. Resp. [# 193]; Order Granting Mot. to Compel Dep. Answers. [#270]. After Plaintiffs’ motion was fully briefed, the Court permitted Defendants to file a supplemental brief because they located documents reflecting that the transitional test had been performed. Defendants now rely on circumstantial evidence from their accountant to show that the test was conducted. The Court concludes that Plaintiffs are not entitled to a partial summary judgment that REMEC did not conduct its transitional test in February 2002. Defendants submitted evidence that REMEC’s independent auditor reviewed that initial test during its audit in April 2003. Katsell Supp. Deck Ex. A (Ernst & Young Audit Results). The auditor’s statement that it “reviewed” the initial test “performed by the Company” on the Commercial segment which used the “discounted cash flow analysis” for both segments “as of February 1, 2002” is circumstantial evidence that RE-MEC did conduct the transitional impairment test as stated in its Form 10-K. Id. at 12 (R1928030). Ernst & Young reviewed Arthur Andersen’s valuation of Solitra, including the fair value of goodwill, as a part of the audit. Id. (noting its review of the Oct. 2001 Solitra analysis); Furukawa Surreply Decl. Ex. A (Arthur Andersen Valuation Analysis of Solitra, dated Oct. 2001). Nonetheless, REMEC has not produced the document and none of REMEC’s witnesses definitively testified to personal knowledge that the test was performed. Furukawa Decl. Ex. B (Hinkle Dep. at 243-44) (“I don’t recall any analysis.”); Furukawa Surreply Decl. Ex. B at 51 & 55 (Sackett Dep. at 124 & 151) (General Counsel does not know of any supporting documents); Fraser Decl. Ex. 11 (Morash Dep. at 36) (doesn’t believe separate transitional test done) & Ex. 30 (Gibbs Dep. at 14-15) (“I do not know if that was done”); but see Katsell MSJ Decl. Ex. G (Gray Dep. at 12) (“I spearheaded” the transitional test with assistance from outside consultant). Consequently, there is a triable issue on this disputed fact. In their supplemental brief, Defendants further argue that REMEC properly tested the goodwill by relying on third-party valuations of recent acquisitions. Defendants argue that the accounting standards permit this approach because the acquired entities constituted a “significant portion” of the Commercial Wireless segment. Defs.’ Supp. Opp. Br. at 2-3; Williams Decl. Ex. 1 (FAS 142, App. B ¶ 155); Furukawa Surreply Decl. Ex. B at 52-55 (Sackett Dep. at 125-29). Plaintiffs objected to the new issue, but responded in their own supplemental brief by disputing whether the transitional test, as reported in the corroborating documents, complied with the accounting standard to value the “reporting unit as a whole.” Williams Decl. Ex. 1 (FAS 142 ¶23). Plaintiffs contend that REMEC improperly substituted an analysis of one acquisition (Solitra) by an outside accounting firm instead of conducting a complete test of the Commercial segment’s goodwill. The Court declines to address this new issue — whether the transitional test, assuming it exists, complied with FAS 142 — because it was not part of either party’s original motion for summary judgment. See Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir.1991) (declining to review issue not raised in opening brief, but raised for the first time in a reply brief); Miller v. Fairchild Indus., Inc., 797 F.2d 727, 738 (9th Cir.1986) (declining to consider summary judgment issue that was not “specifically and distinctly argued” in initial brief). The Court granted leave to file supplemental briefs on the issue of the existence of the transitional test based upon Defendants’ inability to locate documents reflecting that test. [Doc. Nos. 311, 313, 316.] The Court did not grant leave for the parties to advance a new legal theory about the transitional test. 2. FY03 Goodwill Impairment Test The next statement concerns the first annual test of goodwill that REMEC conducted under the new FAS 142 accounting standard. One introductory caveat is appropriate. REMEC filed its Form 10-K in April 2003 before the class period commenced in September of that year. Statements made before the class period can be relevant evidence on this issue of scienter because “they may provide insight into what the defendant knew during the class period.” DeMarco v. DepoTech Corp., 149 F.Supp.2d 1212, 1223 n. 6 (S.D.Cal.2001), aff'd, 32 Fed.Appx. 260 (9th Cir.2002); accord In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 72 (2d Cir.2001) (pre-class data relevant to confirm what a defendant should have known at start of class period); In re Merck & Co., Sec. Litig., 432 F.3d 261, 271-72 (3d Cir.2005) (adopting Second Circuit’s analysis in Scholastic that statements from outside the class period may be relevant evidence for purpose of drawing an inference about defendant’s knowledge). A defendant may be held liable, however, only for the statements made during the class period. DeMarco, 149 F.Supp.2d at 1223 n. 6 (citing In re IBM Corp. Sec. Litig., 163 F.3d 102, 107 (2d Cir.1998)). Here, the class period dictates that liability may be based only upon statements made by Defendants between September 8, 2003 and September 8, 2004. However, the Court considers whether the pre-class period statements are false or misleading on the issue of falsity because it bears on whether Defendants acted with scienter during the class period. The Court analyzes the scienter element below. The Form 10-K included the following language on the valuation of REMEC’s goodwill for the fiscal year that ended on January 31, 2003. The required goodwill impairment test was performed as of December 27, 2002. Our impairment review process is based on a discounted future cash flow approach that uses our estimates of revenue for the reporting units, driven by assumed market growth rates and assumed market segment share, and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimates that we use to manage the underlying business. The estimates we used assume that we will gain market segment share in the future and the Commercial segment will experience recovery and a return to growth and profitability from the current trends. We may incur charges for goodwill impairment in the future, if the products fail to gain expected market acceptance or if we fail to achieve our assumed revenue growth rates or assumed gross margins. In performing the fiscal 2003 annual test for the Commercial segment, we assumed sales growth rates ranging from 5%-15%; gross profit margins ranging from 30%-38% (excluding depreciation); an income tax rate of 18% and a discount rate of 20% .... We did not recognize any goodwill impairment as a result of performing this annual test. Williams Decl. Ex. 56 at 33 (Form 10-K at 27) (emphasis added). Plaintiffs allege that REMEC falsely stated that its goodwill was not impaired for FY03 (measured “as of’ Dec. 27, 2002). They argue that REMEC used inflated and unreasonable gross profit margins to perform that test. Specifically, they seek summary adjudication that REMEC falsely stated that the gross profit margin “estimates are consistent with the plans and estimates we use to manage the underlying businesses.” Id.; Pis.’ MSJ Br. at 14-17 n. 17. In contrast to the narrow question that Plaintiffs raise, Defendants raise a broader issue. In their competing motion, Defendants move for summary adjudication that there is no evidence that the company’s goodwill impairment analysis for FY03 was improper, misleading, or fraudulent. (a) A Jury Must Decide Whether RE-MEC’s FY03 Assumptions of Future Gross Profít Margins of 30% to 38% were “Consistent” with its Business Plan In conducting its FY03 goodwill impairment test, REMEC assumed gross profit margins of 30% for FY04, 35% for FY05, and 38% for the next seven years. Williams Decl. Ex. 56 at 33 (Form 10-K at 27); Katsell Opp. Decl. Ex. J at 298. Plaintiffs argue that REMEC’s internal forecast of its expected gross profit was much less — only 21.7% for FY03. This figure comes from a budget dated February 4, 2003. Fraser Decl. Ex. 24 at 2 (R000172). Plaintiffs use the figure from FY03 because REMEC said the FY04 forecast was based on the “current budget.” Katsell Opp. Decl. Ex. J at 299 (EY-004847) (“Fy 2004 based on current budget.”). Plaintiffs argue that the public statement was false at the time it was made because the assumption that RE-MEC would achieve a 30% gross profit margin in FY04 was inconsistent with the forecast REMEC was using to manage the business (that is, the current budget of FY03 used 21.7%). REMEC, in a subsequent Form 10-K, acknowledged that even “a l%-2% change” in the gross profit margin of the Commercial segment could have a “significant impact” on the outcome of the impairment test. Williams Decl. Ex. 5 at 25 (draft FY04 Form 10-K at 22); Hickman Decl. ¶ 13. The much higher estimate is not “consistent” with the actual 21.7% rate used privately to run the Commercial segment. In opposition, Defendants’ witnesses explained that the figure in the budget includes depreciation; by contrast, the goodwill impairment analysis excludes depreciation. Katsell MSJ Decl. Ex. L at 283-84 (Hinkle Dep. at 158-59); Katsell Opp. Decl. Ex. N at 405-06 (Gray Dep. at 35-36); see Katsell Opp. Decl. Ex. J at 299 (“Gross margin excludes depreciation”). Defendants argue that if the 5% depreciation figure is deducted from the 30% assumption for FY04, it shows that REMEC used consistent gross profit margins in its internal budget and its public statements about goodwill impairment test. Plaintiffs challenge this logic. Even taking into account a 5% difference for depreciation leaves a disparity of 4.3% in FY04. As further evidence, Plaintiffs cite to the Internal Control and Fraud Considerations form that Ernst & Young completed to prepare for its audit of REMEC’s FY03 books. Plaintiffs’ brief states that Ernst & Young “called the GPM assumptions ‘aggressive and unrealistic’ ” as if the auditor specifically identified the gross profit margin assumptions in REMEC’s goodwill impairment analysis. Pis. MSJ Br. at 16. This is a mischaracterization. The memo actually states a concern with “[m]anagement’s commitment to analysts, creditors, and other third parties to achieve aggressive or unrealistic forecasts.” Nonetheless, Ernst & Young’s observation does state its general opinion that REMEC had used unrealistic forecasts. Plaintiffs also cite a draft of a three-year strategic plan to support their motion. Williams Decl. Ex. 10 at 1. The plan forecasts gross margins for the Commercial segment of 25.9% for FY04, 28% for FY05, and 30% for FY06. Id. at 63 (R001319). Plaintiffs argue that these in-house assumptions are inconsistent with the higher gross profit margins announced to the investing public in the Form 10-K. Defendants raise two objections to the admissibility of the August 2003 Three Year Strategic Plan exhibit that Plaintiffs submitted. Williams Decl. Ex. 10. First, Defendants argue the exhibit has not been authenticated. The Court overrules this objection because it is clear that REMEC created the August draft and a proper foundation easily can be laid by a person with personal knowledge that the document is what it is purported to be. Hal Roach Studios v. Feiner & Co., 896 F.2d 1542, 1551 (9th Cir.1990); Burch v. Regents of the Univ. of Calif., 433 F.Supp.2d 1110, 1120 (E.D.Cal.2006); see Katsell MSJ Decl. Ex. J at 269 (CFO Hickman states budgets were based upon “the 2003 strategic plan”). Indeed, Defendants submitted the September 2003 version of that same document. Katsell Opp. Decl. ¶22 & Ex. T. Second, Defendants argue the exhibit is irrelevant because RE-MEC did not use the August draft in its goodwill analysis, rather, it used a September 2003 version as the basis for the assumed revenue. The Court overrules this objection because Plaintiffs offer the earlier draft as evidence of the information that was available to REMEC at the time it prepared its financial statements. Fed.R.Evid. 402. The Court’s review of the record leads to the conclusion that Defendants have raised questions of fact that defeat Plaintiffs’ motion as to the falsity of this preclass period statement. First, Defendants cite a budget for FY04, which began on February 1, 2003. Katsell Opp. Decl. Ex. K. That budget, which is dated March 13, 2003, forecast a 25.12% gross profit margin for the Commercial segment. Id. at 2 (R315180). Adding back the 5% for depreciation makes the assumption 30.12%, which is the same as the 30% assumption that REMEC stated it would achieve in FY04. Second, the budget had been prepared with estimates provided by the product line managers and then consolidated at the corporate level. Defendants argue this “bottom up” approach protected the budget from manipulation by executives. Third, Defendants point to testimony that the company used the information it had available and the results that it expected to achieve. Katsell Reply Decl. Ex. 4 at 103-05 (Ernst & Young Partner Niki Krutop Dep.); Katsell Reply Decl. Ex. 7 at 182-84 (CFO Morash Dep.). Fourth, Defendants cite evidence to explain the higher figures REMEC used for FY05 to FY10. Morash defended using projections of 35% to 38% gross profit margins after FY04 because “[w]e thought things were going to continue to improve, and so, we add a modest improvement on top of that.” Katsell Opp. Decl. Ex. C at 245 (Morash Dep. at 110). In particular, Morash believed that once the manufacturing operations were completely located in China, REMEC’s costs would reduce from “$40 an hour to 40$ an hour.” Id. “So, if that doesn’t improve your gross margin, then I don’t know what does.” Id. Morash also testified that he discussed the assumptions with Ernst & Young during the audit, and the CPA approved them. Katsell Scienter Decl. Ex. A (Morash Dep. at 72). Fifth, REMEC’s independent auditor reviewed the FY03 goodwill impairment testing assumptions as part of its annual audit of the financial statements, and found they were “in line with managements forecasts and expectations of the relative segments’ performance in subsequent years.” Katsell Supp. Decl. at 12 (Audit Results, Report to the Audit Comm, of the Bd. of Directors) (dated Apr. 17, 2003). This included the gross profit margins used by the Commercial segment. “Based on the results of [Ernst & Young’s] analyses, no indicators of impairment were noted.” Id. (emphasis added). The Court concludes that a reasonable jury could accept Defendants’ explanation and take the 5% depreciation into account to reconcile the different figures in the current budget and the goodwill impairment test. There is certainly room for the parties to argue whether these numbers fall within the definition of the word “consistent.” Because a jury could find that REMEC used gross profit margin figures that were the same as its internal projections, Plaintiffs are not entitled to summary adjudication on the falsity of the challenged statement. One further observation: Plaintiffs criticize the use of a budget dated March 13, 2003 to evaluate a goodwill impairment test “as of’ December 27, 2002. Plaintiffs argue that the Defendants’ evidence is irrelevant because the document was “dated 2^ months after the date as of which RE-MEC publicly reported it conducted the test” and “could not possibly be a document used to run the business at the time the test was performed.” Pis. Reply Br. at 7 (emphasis in original). Plaintiffs appear to believe that the “as of’ date is the date on which the goodwill impairment test was “performed.” They also argue that documents prepared closer in time to December 27 are more reliable than those created later. For example, Plaintiffs argue that the version of the budget printed on February 3, 2003 is better evidence than a version prepared in March 2003. Id. at 8 (“While Plaintiffs’ evidence is dated approximately one month after the date the test was conducted “as of,” it was the budget nearest in-time to the testing that Plaintiffs could find in Defendants’ production.”). This- is inaccurate. The “as of’ date is selected by a company to measure goodwill; the company uses the same date in every annual test. REMEC selected the last business day of December for its annual test. Although REMEC’s goodwill was valued “as of’ December 27, 2002, the impairment test itself is performed over many weeks. See generally Williams Decl. Ex. 1 at 81-82 (FAS 142, App. B ¶¶ B142, B204 & B210) (discussing amount of work involved in impairment testing and allowing six months for companies to complete initial test under new method). The test can rely on information available during that time period. During that same time period, REMEC would have been closing its fiscal year end books to prepare its SEC filings and Ernst & Young would have been conducting its annual audit of REMEC’s financial statements. By necessity, a test is conducted “as of’ a date selected by the company even though the books for that period have not yet been closed and the budget for the new year has not yet been finalized. Katsell Reply Decl. Ex. 4 (Krutop Dep. at 103-04) (“the period that is selected is not the period that all the information has to be available ... if you do it, say as of December 27, ... your books for that period, by definition, wouldn’t be closed, nor would you have a budget from that period forward as of that date”). As Defendants point out, REMEC created a “working build” document and then revised the budget several times thereafter. Williams Decl. Ex. 51 at 2 (R000172) (same as Fraser Decl. Ex. 24); Defs.’ Opp. Br. at 3 n. 6. The early versions, including the one dated February 3, 2003, were subject to modification. Katsell Opp. Decl. Ex. C at 245-46 (Morash Dep. at 110-11) (referring to R012945, “it was a preliminary budget” that was “printed” on Feb. 4, 2003, but “[t]here might have been modifications to it after that, ... it’s not final.”). More importantly, FAS 142 provides that companies should use “the most recent budget” to estimate cash flows. Williams Decl. Ex. 1 (FAS App.B ¶ B 152). Moreover, a goodwill impairment test necessarily refers to estimates, forecasts, and projections of future events. It is natural to expect these figures would be modified and refined as the company solidified its strategy for the coming years. Plaintiffs’ complaint that the March 13, 2003 budget was created “one day after E & Y signed off on the impairment analysis” also fails. Pis.’ Reply Br. at 7 (emphasis is original); Williams Decl. Ex. 44 (Ernst & Young initialed “3/12/03”). The budget was available to REMEC during the time it was analyzing the value of its goodwill. To the extent that Defendants rely on Ernst & Young’s approval of the assumptions, the original memorandum was dated January 30, 2003; was written by Kristen Janis, Senior Manager at Ernst & Young; and disclosed that REMEC assumed a 38% gross margin rate for the commercial segment. Williams Decl. Ex. 44 at 1. The Court further notes that Plaintiffs also rely .on documents created after the “as of’ date of December 27, 2003 to support their own motion. Plaintiffs cite three documents that were created well after REMEC announced the goodwill impairment test for FY03. First, they rely on the “Internal Control and Fraud Considerations” form that Ernst & Young prepared in connection with its annual audit in the subsequent year (FY04). Pis.’ MSJ Br. at 16 (citing Fraser Decl. Ex. 23, which is same as Williams Decl. Ex. 26 (EYE-008934)). The form is not dated but the footer contains the date “08/03.” Second, Plaintiffs rely on a version of the three-year strategic plan, dated August 2003. Id. at 17 & n. 19 (citing Fraser Decl. Ex 25, which is same as Williams Decl. Ex. 10 (R001266)). Third, Plaintiffs cite a three-year forecast created in August 2003. Id. (citing Fraser Decl. Ex. 26). (b) A Jury Must Decide Whether RE-MEC’s Goodwill Impairment Analyses were False or Misleading Defendants move for summary adjudication in their favor as to Plaintiffs’ goodwill claims. Their motion covers Plaintiffs’ allegations about the annual goodwill impairment tests for both FY03 and FY04, as well as allegations that RE-MEC should have conducted interim tests on the Commercial Wireless division. Defs.’ MSJ Br. at 6-16. Defendants argue that Plaintiffs have not presented evidence sufficient to support a verdict in their favor on the element of falsity. Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (when moving party is defendant .on an element that plaintiff must prove); Apple Computer, 886 F.2d at 1113. The Court DENIES the motion. Defendants’ motion is based entirely on their argument that Plaintiffs’ experts’ reports are unreliable and are therefore inadmissible under Dauberb. Defs.’ Br. at 10-12 (FY03), 13-14 (interim), & 15-16 (FY04). The Court, however, has concluded that the expert opinions are admissible in so far as they pertain to the annual impairment tests. Consequently, there are competing expert opinions as to whether REMEC’s valuation of goodwill violated GAAP. Compare Minstein Report at 18 (“The projected gross margins exceeded what REMEC had historically achieved or would reasonably be expected to achieve.”), id. at 13 & Ex. 13 (calculating a goodwill impairment charge of $133.9 million for FY03), id. at 19 & Ex. 19 (using 25% gross margin — a number in line with REMEC’s internal information but still optimistic about future growth— resulted in a $69.8 million goodwill impairment for FY04); accord Minstein Decl. ¶¶ 9-11 (FY03) & 26-33 (FY04) and Regan Rebuttal Report at 17-19, 21 (FY03), & 22-25 (FY04) with Holder Report at 18 (“the methodology employed by REMEC in its related impairment analyses appears reasonable”). Provenz, 102 F.3d at 1490 (“As a general rule, summary judgment is inappropriate where an expert’s testimony supports the non-moving party’s case.”) (citations omitted). To the extent that Defendants point to evidence in the record that supports REMEC’s analysis, these present questions of fact. Whether RE-MEC’s FY03 and FY04 goodwill impairment tests violated GAAP is, therefore, a jury question. (c) Plaintiffs’ Claim on Interim Testing Fails as a Matter of Law Defendants also move for summary judgment on Plaintiffs’ related claim that REMEC’s failure to conduct interim tests violated GAAP. Plaintiffs contend REMEC falsely stated, both before and during the class period, that there were no impairment indicators. See e.g., Brownlie Decl. Ex. H (2Q04 Form 10-Q at 19) (“Through August 1, 2003, there have been no such indicators.”). Plaintiffs’ only evidence on this issue was Minstein’s expert testimony. The Court has stricken the relevant portions of Minstein’s testimony because he offers unsupported and unreliable conclusions. Without that evidence, Plaintiffs have not created a genuine issue of fact as to whether certain events triggered RE-MEC’s obligation to conduct interim evaluations of goodwill. As such, the Court GRANTS Defendants’ motion, as to that issue. C. Ragland’s Optimistic Statements about Future Plaintiffs contend that Ragland misled the market by making overly optimistic statements in December 2003. Pis.’ MSJ Br. at 6-13; Pis.’ Reply Br. at 4 n. 3. Defendants filed a cross motion on the December statements and they seek partial summary judgment that similar statements in September were not misleading as a matter of law. Defs.’ MSJ Br. at 17-19. “Projections and general expressions of optimism may be actionable under the federal securities laws.” In re Apple Computer Sec. Litig., 886 F.2d 1109, 1113 (9th Cir.1989) (pre-PSLRA). “In this circuit, a projection or statement of belief may be actionable to the extent that one of the three implied factual assertions is inaccurate: ‘(1) that the statement is genuinely believed, (2) that there is a reasonable basis for that belief, and (3) that the speaker is not aware of any undisclosed facts tending the seriously undermine the accuracy of the statement.’ ” Hanon v. Dataproducts Corp., 976 F.2d 497, 501 (9th Cir.1992) (quoting Apple Computer, 886 F.2d at 1113); accord Virginia Bank- shares, Inc. v. Sandberg, 501 U.S. 1083, 1093-94, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991) (statement of belief may be actionable if speaker knows the opinion has no reasonable basis in fact at the time it is expressed); Marx v. Computer Sciences Corp., 507 F.2d 485, 489 (9th Cir.1974) (“a forecast, essentially a prediction, may be regarded as a ‘fact’ within the meaning of’ Rule 10b-5). “The fact that the prediction proves to be wrong in hindsight does not render the statement untrue when made.” In re VeriFone Sec. Litig., 11 F.3d 865, 871 (9th Cir.1993) (citing Marx, 507 F.2d at 489-90). The Ninth Circuit has held that misleading opinions (as compared to statements of fact) must be “both objectively and subjectively false or misleading.” Rubke v. Capitol Bancorp, Ltd., 551 F.3d 1156, 1162 (9th Cir.2009). “[A]s opposed to simple representations of historic fact,” an optimistic prediction of future growth, profit, or success “presents more subjective issues.” Apple Computer, 886 F.2d at 1113; G & M, Inc. v. Newbern, 488 F.2d 742, 745-46 (9th Cir.1973) (“Under the securities law a reasoned and justified statement of opinion, one with a sound factual or historical basis, is not actionable. Here, however, considering the gross disparity between prediction and fact ..., we have no difficulty finding this ‘prediction’ to be actionable.”). In certain circumstances, a generalized, run-of-the-mill assertion of corporate optimism amounts to “mere puffery” that cannot be the basis of a securities fraud lawsuit. In re Impac Mortgage Holdings, Inc. Sec. Litig., 554 F.Supp.2d 1083, 1096 (C.D.Cal.2008) (citing Glen Holly Entm’t, Inc. v. Tektronix, Inc., 352 F.3d 367, 379 (9th Cir.2003)); In re Wet Seal, Inc. Sec. Litig., 518 F.Supp.2d 1148, 1168 (C.D.Cal.2007). Courts often analyze the materiality of such statements because no reasonable investor would rely on a company’s subjective expression of optimism for the future. See e.g., In re Copper Mountain Sec. Litig., 311 F.Supp.2d 857, 868-69 (N.D.Cal.2004); VeriFone, 11 F.3d at 870. Here, however, the parties have not moved for summary judgment on the materiality element, but instead analyze whether the statements are false or misleading. Pis. MSJ Br. at 1-2, 7-9 (Sept, statement); Defs.’ MSJ Br. at 3-5 & 16-19 (Sept. & Dec. statements); but see Defs.’ MSJ Br. at 17 (mentioning materiality in passing). 1. September 2003 Statements REMEC issued a press release on September 8, 2003 to announce the results of its second quarter of FY04. Williams Deck Ex. 24. REMEC reported the hard financial data, including net sales, net loss, and gross profit. The last paragraph quotes Ragland in his role as CEO as follows: Continued improvement in sales and gross margins, as well as reduction in operating expenses and critical competitive wins, supports our confidence in REMEC’s game plan to exit FY'04 with sustainable growth and profitability. In addition to continued strong market share gains, we believe that the OEM and service provider customers are again spending on wireless infrastructure. Our Defense and Space Group continues to perform at record levels, while we continue to improve the performance of our Commercial Group The acquisition of Himark expands our ability to serve the China market and provides important momentum and competitive advantage in achieving our goal of a near term return to profitability and a strong second half performance. Id. Defendants argue that these statements are the type of soft information predicting the future that are not actionable as a matter of law. Plaintiffs rely on their expert’s opinion that Ragland’s projections were flatly contradicted by other, non-disclosed information. A close look at Ragland’s statement shows that part of it concerned the entire company. When Ragland spoke in general terms of factors that supported “confidence” in the “game plan” to achieve profitability by the end of the fiscal year on January 31, 2004, he was predicting the consolidated results for both segments of the company. Id. Defendants point to the record to show that shortly before Ragland made that public prediction, REMEC internally forecast that its consolidated operations would earn a profit in the third and fourth quarters. Williams Decl. Ex. 7 at 65 (R001426) (forecasting $1.7 and $1.6 million net income in third and fourth quarters, respectively, for entire company); Katsell Opp. Decl. Ex. C at 247 (Morash Dep. at 219) (the entire company “was expecting a small profit” in third quarter); Fraser Decl. Ex. 11 (Morash Dep. at 215-17). Plaintiffs’ expert criticizes Ragland’s statements because he did not disclose that REMEC’s internal forecast for the operating income (as compared to net income) predicted consolidated losses of $2.2 million and $700,000, respectively. Min-stein Report at 23; Minstein Decl. at 23. Plaintiffs’ expert opines that Ragland’s predictions were misleading because RE-MEC had large operating losses and the forecast of net income was “only possible with substantial income from non-recurring items unrelated to operations,” Min-stein Decl. at 24, ¶¶ 42, 43, & 44(b), namely, a $2 million gain from an executed trade of foreign exchange. Williams Decl. Ex. 7 at 56 (R001417). The last part of Ragland’s statement concerns the Commercial Wireless Segment. Ragland stated that the performance of that separate segment had been improving in comparison to prior quarters. He identified the acquisition of Himark as a factor that supported his optimism that REMEC would be “achieving our goal of a near term return to profitability.” Williams Decl. Ex. 24. Plaintiffs’ expert notes that this prediction of profit is contradicted by the internal forecast of large net losses in both the third and fourth quarters for the Commercial segment. Minstein Decl. at 23, ¶ 44(a) & (b)(i); Williams Decl. Ex. 7 at 66 (R001427) (forecasting $4.9 and $3.5 million losses in third and fourth quarters). The Court DENIES Defendants’ motion as to the September 2003 statements. Although Ragland was predicting uncertain, future results, the record contains financial forecasts that cast doubt on his optimism. The interpretation of the financial forecasts may be open to debate, but Plaintiffs present evidence that REMEC had internally forecast large losses just three days before Ragland predicted the company would show a profit at the end of FY04. Given the amount of the Commercial segment’s actual net losses in the first and second quarters, $9.2 and $7.7 million, and its projected losses of $4.9 and $3.5 million for the third and fourth quarter, Plaintiffs raise a triable issue of fact as to whether Ragland’s projections ignored facts that seriously under