BlackBerry accused of propping up stock with false claims
Shareholder lawsuit accuses the struggling handset maker of making false and misleading statements about the company's financial health and the prospects for BlackBerry 10.
A BlackBerry shareholder has filed a lawsuit against the struggling handset maker and two of its executives, alleging they made false and misleading statements about the company's financial health and the prospects for BlackBerry 10.
In a lawsuit filed Friday in federal court in Manhattan, investor Marvin Pearlstein alleges the company misled investors last year by saying BlackBerry was "progressing on its financial and operational commitments" and that the previews of its BlackBerry 10 smartphone platform had been well received by developers.
The lawsuit alleges that BlackBerry CEO Thorsten Heins further misled investors during a September 27, 2012, conference investor call when he said the handset maker "continues to be a financially strong company and we're executing and delivering on our commitments," and that it "remains a strong, innovative and relevant player in the mobile computing world."
"The company was not on the road to recovery and re-emerging as a lead player in the wireless communications industry," the plaintiff said in the 35-page complaint (see below). "In reality, the BlackBerry 10 was not well received by the market and the company was forced to write down a nearly $1 billion charge related to unsold BlackBerry 10 devices and lay off approximately 4,500 employees, totaling approximately 40 percent of its total workforce."
The lawsuit, which also names Chief Financial Officer Brian Bidulka as a co-defendant, seeks to represent the "thousands" of shareholders who purchased BlackBerry stock between the time Heins allegedly made those statements and September 20 of this year, when BlackBerry announced itin its fiscal second quarter.
A BlackBerry representative declined to comment on the lawsuit.
The company, which announced a plan last month to BlackBerry Z10, which did not sell well. The touch-screen Z10, a departure from the company's famous keyboard-equipped mobile phone, was designed to showcase the next-generation BlackBerry 10 operating system., took a $934 million write-down on inventory of the
After hitting a high of nearly $145 in 2008, the company's stock has lost a staggering 94 percent of its value.