2013 just might be the year when the once pioneer of the smartphone market Research in Motion may meet its demise. Things aren’t definitely going well for RIM or now renamed BlackBerry Ltd. Now there is another scandal awaiting the troubled company. A shareholder has filed a class action lawsuit against the smartphone maker in which he claims that investors had been misled by the company regarding its future. This also includes the success of the new BlackBerry 10 line of smartphones against the competitors in the market. The lawsuit is representing thousands of shareholders.
These investors had purchased the stock of the company between September 27th and September 30th, 2013. According to the shareholders, the executives of the company had misrepresented the state of the operations during this time period. Last year, the investors had been misled by the Waterloo, Ontario based BlackBerry Ltd as per the Marvin Pearstein, a shareholder of the Canadian firm. In his lawsuit, he has mentioned that the company had told the investors that the developers had given a good response to the new BlackBerry 10 platform and the company was well on its way to meet is operational and financial commitments.
The complaint has alleged that there wasn’t a positive response to BlackBerry 10 in the market and the company had been forced to lay off about 40% of its total workforce that amounted to nearly 4500 employees. The list of defendants included the names of Brian Bidulka, the Chief Financial Officer of the company and Thorsten Heins, the Chief Executive Officer of BlackBerry. No comment was made by the company when questioned and they simply said that the matter had been taken under consideration. Last month, the company had revealed that it was expecting to book losses of nearly 1 billion.
This loss was primarily because of the unsold Z10 touchscreen smartphone of the company. Numerous news releases have been outlined in the court filing, which were issued by BlackBerry along with quarterly conference calls. Here, it is alleged by the lawsuit that the investing public is deceived by the executives. It is further claimed that the recent decline in the stock of the company was a direct fallout of the misrepresentation of the financial state of the company by its executives. As per the claims, the magnitude and timing of the plunging stock price isn’t because of industry or macroeconomic factors or changed market conditions.
The stock price of the company has seen a 25% decline since September 20th when it made its announcement of massive layoffs and losses. Numerous other class action lawsuits have been filed against the company in the past too. A lawsuit had been thrown out by a judge in 2011, which had also claimed that the investors had been misled by the executives of the company regarding its prospects and financial conditions including the unsuccessful introduction of its PlayBook tablet. Another lawsuit filed in the same year sought refunds for the downtime that occurred because of the service outage of BlackBerry.