A class action suit has been filed in the US Federal Court’s SDNY: Pearlstein et al v. BlackBerry Inc et al, U.S. District Court, Southern District of New York, No. 13-7060. Reuters reports:
By Nick Brown
NEW YORK | Fri Oct 4, 2013 9:35pm EDT
(Reuters) – A shareholder of BlackBerry Ltd sued the company and its executives on Friday, accusing them of inflating the stock price by painting a misleadingly rosy picture of the business prospects of its BlackBerry 10 smartphone line.
Waterloo, Ontario-based BlackBerry, formerly Research In Motion Ltd, misled investors last year by saying that the company was “progressing on its financial and operational commitments,” and that previews of its BlackBerry 10 platform were well received by developers, according to shareholder Marvin Pearlstein in a lawsuit lodged in Manhattan federal court.
Pearlstein is seeking to represent a class of “thousands” of shareholders who bought stock between September 27, 2012, when the company touted its strong financial position, and September 20 of this year, when it revealed it would have to write down between $930 million and $960 million related to unsold BlackBerry 10 devices, according to the lawsuit.
“In reality, the BlackBerry 10 was not well-received by the market, and the company was forced to … lay off approximately 4,500 employees, totaling approximately 40 percent of its total workforce,” the complaint alleges.
In addition to BlackBerry, Chief Executive Thorsten Heins and Chief Financial Officer Brian Bidulka are named as defendants. A spokeswoman for BlackBerry declined to comment.
BlackBerry put itself on the block in August after bleeding market share to other smartphone makers over the past few years, namely Apple Inc and Google Inc. It accepted a tentative offer of $4.7 billion from Fairfax Financial Holdings last month.
Several sources close to the matter told Reuters the company is in talks with Cisco Systems,Google and SAP about selling all or part of itself. BlackBerry has also asked for preliminary expressions of interest from Intel Corp and Asian companies LG and Samsung by early next week. Cerberus Capital Management was reported to have expressed such interest on Wednesday.
According to the lawsuit, the write-down announced on September 20 sent stocks reeling, with share price dropping 24 percent, from $10.52 on September 19 to $8.01 on September 25. The 35-page complaint asserts two violations of the Securities and Exchange Act of 1934.
It is not the first time BlackBerry has been in trouble with investors. A judge threw out a 2011 lawsuit by a proposed class of stockholders who said the company misled them about the prospects of its then-new line of tablet and other products. The plaintiffs in that case have appealed the decision.
The latest lawsuit is Pearlstein et al v. BlackBerry Inc et al, U.S. District Court, Southern District of New York, No. 13-7060.
(Reporting by Nick Brown; Editing by Prudence Crowther)
From The Wall Street Journal:
Kahn Swick & Foti, LLC and Former Louisiana Attorney General File Suit Against BlackBerry Limited: Remind Investors With Large Financial Interests of Important December 3, 2013 Deadline – BBRY
NEW ORLEANS, LA–(Marketwired – Oct 4, 2013) – Kahn Swick & Foti, LLC (“KSF”) and KSF partner, Former Attorney General of Louisiana Charles C. Foti, Jr., announce the commencement of the firm’s securities class action lawsuit against BlackBerry Limited (“BlackBerry” or the “Company”) (NASDAQ: BBRY). The lawsuit was filed in the United States District Court for the Southern District of New York on behalf of purchasers of BlackBerry common stock between September 27, 2012 and September 20, 2013 (the “Class Period”).
What You May Do
If you are a BlackBerry shareholder and would like to discuss your legal rights and how this case might affect you and your right to recover for your economic loss, you may, without obligation or cost to you, e-mail or call KSF Managing Partner, Lewis Kahn (firstname.lastname@example.org), or KSF Partner Melinda Nicholson (email@example.com), toll free at 1-877-515-1850. If you wish to serve as a lead plaintiff in this class action by overseeing lead counsel with the goal of obtaining a fair and just resolution, you must request this position by application to the Court by December 3, 2013. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. KSF encourages both institutional and individual purchasers of BlackBerry to contact the firm. The ultimate resolution of any securities class action is strengthened through the involvement of aggrieved shareholders and lead plaintiffs who have large financial interests. KSF also encourages anyone with information regarding BlackBerry’s conduct during the period in question to contact the firm, including whistleblowers, former employees, shareholders and others.
About the Lawsuit
BlackBerry and certain of its officers and directors are charged with making a series of materially false and misleading statements and omissions related to the Company’s business and operations in violation of the Securities Exchange Act of 1934. Specifically, BlackBerry failed to inform investors that, contrary to the Company’s statements that its new BlackBerry 10 line of smart phones financially strengthened BlackBerry and positioned the Company on the road to recovery, BlackBerry’s business, operations and financial situation was made even worse by the introduction of the BlackBerry 10 platform, which was poorly received by the market.
On September 20, 2013, BlackBerry announced the true state of the Company, which incurred massive charges due to unsold BlackBerry 10 devices and was forced to lay-off approximately 40% of its workforce. In relevant part, the release explained:
[The Company] expects to report a primarily non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately $930 million to $960 million, which is primarily attributable to BlackBerry Z10 devices.
Furthermore, the Company also announced that it is targeting an approximate 50% reduction in operating expenditures by the end of the first quarter of Fiscal 2015. As part of this, BlackBerry will implement a workforce reduction of approximately 4,500 positions or approximately 40% of the Company’s global workforce resulting in a total workforce of approximately 7,000 full-time global employees.
As a result of the foregoing disclosure, BlackBerry stock plummeted from a closing price of $10.52 per share on September 19, 2013 to a close of $8.73 per share on September 20, 2013. The value of BlackBerry stock continued to slide on heavy trading volume over the next few days as investors digested the bad news, and closed at $8.01 on September 25, 2013.
About Kahn Swick & Foti, LLC
To learn more about KSF, whose partners include the Former Louisiana Attorney General, Charles C. Foti, Jr., and other lawyers with significant experience litigating complex securities class actions nationwide on behalf of both institutional and individual shareholders, you may visit http://www.ksfcounsel.com.
Kahn Swick & Foti, LLC
206 Covington St.
Madisonville, LA 70447