Blackberry Slapped with Investor Lawsuit

by Jeff Wiener on October 8, 2013

While the beginning of the end for Blackberry started long ago, it could be said that the final chapter of the story of the company’s demise began with the release of Blackberry 10, the much ballyhooed operating system that the Waterloo Company touted as the saviour of the world once great smartphone titan. Leading up to its release, Blackberry projected an air of optimism to investors and the market alike, confident it would be able to compete with the likes of Android and Apple’s iOS.

But at least one investor thinks Blackberry knew it had placed all its eggs in the wrong basket all along, and has filed a class action lawsuit against Blackberry and two of its executives, as the CBC reports, “accusing them of inflating the stock price by painting a misleadingly rosy picture of the business prospects of its BlackBerry 10 smartphone line.”

The lawsuit seeks to represent the interests of thousands of investors who bought stock from September 27, 2012 to September 20, 2013, during which the lawsuit alleges Blackberry misrepresented the state of its operations, the popularity of its products, and its financial woes, a move that comes as simply the first in a long line of those trying to pillage whatever they can before the Blackberry ship slips beneath the waves.

According to disgruntled shareholder Marvin Pearlstein, once great Canadian mobile powerhouse Research in Motion cum Blackberry misled investors last year by stating the company was “progressing on its financial and operational commitments,” and claiming that initial previews of its forthcoming Blackberry 10 OS were well-received by analysts and developers.

“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% of its total workforce,” the complaint alleges.

Of course we now know that following the company’s disastrous second quarter results, which saw the Blackberry post almost a billion dollar loss, and its subsequent requiem about how it all went wrong that none of those initial predictions were accurate, now it will be up to the courts to decide if such inaccurate estimates were simply overly-optimistic forecasting or whether they were outright deception.

Blackberrys’ chief executive Thorsten Heins, not the author of the company’s demise but certainly a strong contributor, and the company’s CFO, Brian Bidulka, were also named in the suit as those specifically complicit in deceiving investors.

Now don’t get me wrong, if Blackberry knowingly misled its investors there will be hell to pay, but to me this seems nothing more than sour grapes from investors who unfortunately bet on the wrong horse. If investors didn’t know that Blackberry was far from being a sure bet even leading up to the release of Blackberry 10, well perhaps they should have done their homework, as even a cursory search of this blog and others would have revealed that the company’s exalted new BB10 platform was a risky Hail Mary pass, one that was almost certainly doomed to fail.

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