Blackberry Shareholder Launches Class Action Lawsuit

A BlackBerry shareholder have filed a class action lawsuit alleging that the company’s directors misled investors about the success of BB10 and the resulting state of the companys finances. BlackBerry’s chief executive, Thorsten Heins, and chief financial officer, Brian Bidulka, have been named as defendants in the document filed by Marvin Pearlstein.

The suit accuses senior BlackBerry team members of making “materially false and misleading statements and omissions related to the companys business and operations”.  It says that “contrary to the companys statements that its new BlackBerry 10 line of smartphones financially strengthened BlackBerry… [its] business, operations and financial situation was made even worse by the introduction of the BlackBerry 10 platform, which was poorly received by the market.”

The document cites last month’s catastrophic financial results for the last quarter, a loss of between $930m and $960m, with BlackBerry charged nearly $1bn for unsold Q10 and Z10 devices, as evidence to support the case. This loss meant it was also forced to cut its workforce by 40 per cent, or 4,500 people. After this news, the company agreed to be bought by its largest shareholder Fairfax Financial Holdings for $4.7bn or $9 per share but said it was exploring other options. Reuters has identified Cisco, Google and SAP as still discussing BlackBerry bids.

The filing points out that BlackBerry stock dropped from $10.52 per share on September 19 – pre-financial disclosure – to $8.73 per share on September 20. On Friday, BlackBerry shares stood at an even more measly $7.69, although its stock has been at a lower value, bottoming at $7.62 in October last year.

Former CEO and founder Jim Balsillie dumped his shares back in February, soon after the BB10 platform was unveiled. At the event, Heins said the company had been through a journey of transformation, even dropping the name RIM and hiring Alicia Keys to advise on marketing, but sales have not returned to previous heights.

The lawyers representing the group, Kahn Swick & Foti, are encourging anyone with information – whistleblowers, former employees and shareholders – to get in touch.