Ontario-based BlackBerry, formerly Research In Motion, misled investors last year by saying 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 Sept 27, 2012, when the company touted its strong financial position, and Sept 20 of this year, when it revealed it would have to write down $930m to $960m 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 about 4,500 employees, totalling 40% 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 and Google. It accepted a tentative offer of $4.7bn from Fairfax Financial Holdings last month.
According to the lawsuit, the writedown announced on Sept 20 sent stocks reeling, with share price dropping 24%, from $10.52 on Sept 19 to $8.01 on Sept 25. The 35-page complaint asserts two violations of the Securities and Exchange Act of 1934.