Beleaguered BlackBerry hit with shareholder class action lawsuit for misrepresenting state of company

“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,” Nick Brown reports for Reuters. “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 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 between $930 million and $960 million related to unsold BlackBerry 10 devices, according to the lawsuit,” Brown reports. “‘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.”

Brown reports, “In addition to BlackBerry, Chief Executive Thorsten Heins and Chief Financial Officer Brian Bidulka are named as defendants.”

Read more in the full article here.

MacDailyNews Take: If you bought RIM/BlackBerry stock at any time in the last three years expecting the iPhone roadkill to somehow magically spring to life, you’re too stupid to own stock.

That said, executives who misrepresent what’s really going on with their beleaguered companies certainly should be held responsible when the whole mess finally implodes.

[Thanks to MacDailyNews Readers “Fred Mertz” and “Lynn Weiler” for the heads up.]

Related articles:
Beleaguered Blackberry reports $965 million second quarter loss – September 27, 2013
T-Mobile USA stops stocking beleaguered BlackBerry’s phones – September 26, 2013
Amateur hour is over: Beleaguered BlackBerry sold to Fairfax Financial-led consortium – September 23, 2013
Beleaguered BlackBerry’s CEO calls Apple’s iPhone old news – March 18, 2013

29 Comments

  1. Unless, as CEO, you want to hasten the demise of your company when you suspect you’re sinking, don’t you have to paint a somewhat rosey picture? Shouldn’t the buyers in this case have figured out for themselves that Blackberry was going down? I mean, if the management had published incorrect and misleading numbers, I suppose that would be one thing, but to say that your next OS is going to kill it, and that developers are loving it, these are such forward-looking statements. I would think executives of other companies do the same all the time. The executives could really not have foretold the future.

    1. When Steve Elop told everyone that Symbian was a burning platform Nokia sales imploded.

      I can’t wait for his reverse takeover of Microsoft to finish so he can announce “Windows is a burning platform”.

      … Some people just love to see the world burn.

      1. Will never happen unless iOS starts to look like something other than Android. Windows Phone is here to stay and with 1.4 billion people using some sort of Windows device suggests that MSFT has quite an audience to attract to their platform. The next marketshare upward push will be Windows Phone. This said I hope that iPhone is always available in its current size as that is what keeps me on the platform! Getting my 5s this week and hope that all the bugs that are being reported with this device are not as bad as they are made out to be.

  2. Yeah it’s a pretty standard tactic not to admit defeat and extol success until the hordes have chopped off your sorry head. At that low point where it would take a miracle company morale needs all the support it can get. You know those poor RIM employees were the first to know they were going to die and the executives the last. Just like the crew on a movie set know a stinker when they see one before the director and producers do.

  3. Apparently the guy never heard of “selling short” or of the iPhone, either, otherwise he would have known it was a bad idea. $60+ to $10 in two years. That’d be a cool return. (Why didn’t *I* do that?) Now if he had an investment broker and HE thought it was a good thing to “buy”, then I could see suing him.

  4. On what basis did these investors buy crackberry stocks and expecting it to be a great investment, especially in 2012. These investors are stupid and they deserved to get their fingers burned for buying such a stupid stocks

  5. when the iPhone was announced in 2007 when aapl was around 70 I wrote in forums like Seeking Alpha, BusinessInsider, Fool.com that the iPhone was a game changer.

    RIM investors laughed in my face, called me deluded fanboy, idiot, Steve Jobs Ass kisser, RDF deluded etc etc.

    RIM investors told me that the iPhone would never gain traction, that RIM had a LOCK on enterprise, businesses had invested so much in RIM tech like Servers that they would never leave it, even the Whitehouse used BBs, the iPhone was a stupid TOY.

    Rim CEOS partied (the canadian press was full of them at balls and galas) and shopped for hockey teams.

    The iPhone went off like a rocket.

    I told RIM investors to cash out. They told me that RIM had bought QNX that would BLOW iPhone apart. That QNX was an ‘advanced’ multi purpose OS ‘used by the US military’. I told them the biggest use for QNX was for CAR computing systems , that it was a battery hungry designed for plugged in systems and that the ‘QNX military radio basically did calls and weighed kilos’, it was NOT a modern smart phone OS. Again RIM investors called me an idiot. The iPhone was a TOY.

    Rim investor cheered when after more than a year of delays the first QNX device the Playbook came out, the QNX wonder DID NOT RUN NATIVE BB EMAIL (the supposed advantage of RIM) or Calendar etc !! It was battery hog, didn’t have apps (advertised you could run ANDROID apps in slow motion EMULATION mode ! why anybody would run emulation android on BB when android tabs were cheaper escaped RIM investors … ) , it took even longer for Rim to hammer QNX into any sort of shape for phones .

    I told RIM investors to cash out, they said I was an apple fanboy and the upcoming BB Z10 would be a game changer…. No logic would convince them,

    etc.

    RIM investors are idiots.

    1. RIMM did have a lock on the enterprise market. An overwhelmingly powerful grip. But they relaxed their grip and lost the market. Shouldn’t have happened. But it did. Unfortunately the long road of business is strewn with such car wrecks. Do you remember AT&T? They went out of business and were absorbed by Southwestern Bell. Only the name remains. And they were an icon forever. There are no guarantees in business. It can happen to any company. Including AAPL. Look what happened to Kodak. It wasn’t that they failed to try to adapt to the digital revolution, they just couldn’t execute in time. They were in a business that was simply overwhelmed in a short time by an entirely new process. It’s sad to see huge companies go out of business because so many people lose jobs and pensions. Jobs and families, much more important than being able to gloat about a company’s demise as a fanboy.

      1. dude I don’t know where you’re coming with your reply “Jobs and families, much more important than being able to gloat about a company’s demise as a fanboy”

        My whole post was about INVESTORS who had so much apple hate they refuse to listen when I pointed out the game changing power of the iPhone , in my post I didn’t gloat about families losing jobs etc at all.

        i’m saying that many people including myself pointed out the CLEAR problems in RIM for YEARS and RIM investors didn’t pay attention instead those I met in forums were brazen calling apple fans including myself idiots and the iPhone a ‘toy’. Years dude of tech facts every where and now they want to sue Rim?

        RIM DID NOT FALL OVERNIGHT LIKE TYPHOON HIT IT. IT TOOK YEARS.

        All this info about iPhone, QNX etc was out there put out by other fans as well but RIM investors paid no attention For YEARS — THESE are the people I’m calling idiots.

        And did you forget that the RIM CEOs brushed off the iPhone, even a long time after Jobs iPhone announcement they were still partying , Perhaps those families who lost jobs should blame them instead of apple fans who gave clear warning? Perhaps YOU should blame those RIM CEOs for those people’s problems instead of calling me a ‘fanboy’ in a derogatory fashion ?

        AND please NOTE also that business is business and RIM went out out full scale war to COMPETE WITH APPLE AS WELL and I doubt if regrets about putting apple out of business factored much in their corporate initiatives. (In fact many RIM, Nokia, Msft etc execs were positively gloating how ‘Apple had no chance in the phone business’ and they would be financially crushed).

        I didn’t criticize rim but its investors BUT actually you’re saying we shouldn’t criticize rim because lots of companies fail and lots of families get affected IS SILLY as it is LIKE SAYING WE SHOULDN’T CRITICIZE THE CAPTAIN OF THE TITANIC OR IT’S MANUFACTURERS (who swore it was unsinkable) OR IT’S OWNERS (who didn’t put enough lifeboats) BECAUSE MANY OTHER SHIPS HAVE SUNK BEFORE. Put facts, the blame out there otherwise we’ll never learn.

        1. Didn’t mention you did I? No. Simply expressing an opinion just as you did. I was merely talking about all the fanboys here who are never objective.
          You told people to get out of of RIMM? Apparently a lot of them already knew to get out. Just as I knew to get out of AAPL a year ago when it hit $700. I tried to tell people here to get out of AAPL when it hit $700 as there would be a good time to get back in but apparently most didn’t listen. There’s a lot of crying and wringing of hands here every day. I even threw out good alternative investments which have clearly done well in the last year : PCLN,COST,NFLX,TWX,AMZN. That’s where I have been for the last 13 months. And damned happy! Lay all of those charts over AAPL and RIMM for the last year and see how things have worked out. And I still love all my Apple stuff. You’re right, some people just have a death wish.
          You seem to be very concerned what RIMM investors on a website called you. Who cares? It’s just a website. Sit back and relax. Pour yourself a tall refreshing drink. Go out for a walk. Enjoy the sights. Enjoy the weather. Enjoy all the pretty girls. Try not acting like a paranoid fanboy. Not that you are. Just saying.

          1. “Didn’t mention you did I? .”

            didn’t mention me..?
            you posted AS A REPLY TO MY POST on my thread so what should I think?
            If you wanted to just vent out at apple fans in general as you say why didn’t you make a NEW OPEN POST? When you do a reply to my post of course I assume you’re talking about me, so man up and don’t squirm about it.

            You keep telling us how smart you are for bailing out at 700 — i’ve read like 10 of your posts like that (you love to GLOAT at it telling how apple investors are STUPID compared to your far sighted genius, that people should be smart like you and not invest with emotion but logic) yet you criticize me for using YOUR same arguments about logic that Rimm investors should have bailed out when the facts were out there. You’re sort of twisted huh? you can say it about appl investors but I can’t about Rim?

            “You seem to be very concerned what RIMM investors on a website called you. Who cares? ”

            I can care as it affected me since they were calling me idiot fanboy etc BUT:
            you spent a LOT of time replying TWICE with very long posts on that subject, so even when it DID NOT AFFECT YOU you seem very concerned about my interest in it so who is the obsessed guy now?

            “Try not acting like a paranoid fanboy”
            Everybody that doesn’t have the same opinion as you is a ‘fanboy’, you can use certain kinds of argument (like investors should use facts) but others can’t, you criticize others for having no sympathy for RIM families yet even in your latest post above show YOU have NO SYMPATHY FOR AAPL INVESTOR FAMILIES … INSTEAD you GLOAT : “I knew to get out of AAPL a year ago when it hit $700 … I have clearly done well in the last year : PCLN, COST, NFLX,TWX, AMZN… And damned happy!”?

            Double standards huh?

            clearly you have little ‘sympathy’ for families etc but just take it as another opportunity to state how ‘clever’ you to have bailed at 700…
            lol.

        2. And it was RIMM. Not RIM. Maybe that’s why the RIMM investors made fun of you? Maybe? Just saying. Anyway, it’s BBRY now. At least until they are bought out or evaporate. And actually, I made really good money in RIMM back in 1999 through early 2000. Really good money. Almost forgot about that.

          1. go look at my original post I don’t think I wrote anywhere that specifically referred to RIMM the stock but RIM the company,

            like “I told RIM investors to cash out. They told me that RIM had bought QNX .. Rim CEOS partied” etc

            go substitute RIM for apple and see what I mean.
            I never mentioned RIMM the stock as RIMM was x number of dollars etc.

            even if I did (which i don’t think i did rechecking my post) you want to be grammar police? usually people who lost arguments go into being grammar police…
            (oh I just noticed I didn’t cap the start of my sentences above, you going to criticize me on that?)

    2. In fairness the Apple share prices will also tank at some point… Oh yet it already has… Remember $700.00 with all sorts of fanboys trying to convince themselves that $1000.00 was just around the bend. It just so happens that RIM investors had faith and hope and this should not be ridiculed. Let’s see how Apple shareholders deal with their sentiment if the stock tumbles below $350.00 which is probably where it is heading unless Apple can start selling to a larger audience than the one that buys every product that they make. Yes they sell a lot of hardware but just in my own circles I see more Androids than anything else and nice devices at that.

      1. your post is clueless so i won’t go into detail debating it but just point out:

        Goog P.E 17.9
        income growth 10.8

        Apple P.E 12
        income growth 61%

        goog has much higher p.e in spite of the fact that’s financial growth is way slower. IF appl had Goog’s P.E the stock will be over 700 now.
        i.e Aapl fall has nothing to do with its sales or performance but the compression of the P.E.

        1. There is nothing to debate. Your ratio analysis amounts to a hill of beans and you would only try to ignore my point on what was the sentiment when Apple traded at $700.00. Move on fanboy!

      2. Well, Look Aid, your ‘circles’ must be fairly small. My ‘circles’ have very few people who even use smartphones, but there’s still a fair proportion who use iPhones, but in the larger world that I inhabit, which actually involves travelling around capital cities like London, by far and away the majority of people I see in tourist areas, on public transport like the Tube, just in shops and bars, most people I see using smartphones are using Apple devices; 3G/3Gs/4/4S/5. That is a clear and indisputable fact. Call me a fanboy, call me anything you want, except late for lunch, and I’ll happily call you an idiot, because I can tell an Apple device from even the most blatant Samsung copy, and Apple phones outnumber everyone else’s by three or four to one.

  6. MDN says people buying RIM stock in last 3 years are idiots. Perhaps so but today I walked by a shop who’s widow was covered in old newspapers. One had an article concerning the technology agreement between RIM and Mercedes for their F1 team and maybe more extensive for all I know. It was dated 15 Feb 2013. Was a company of their status seriously so unaware of how toxic such a tie up would look only months in the future? Can’t imagine that RIM let on just how in crisis they were but questions do have to be asked as to how Mercedes could be quite so blind when they are supposed to be one of the most business savvy companies in the World. So if they were fooled…

  7. Heins is a great CEO with his inspiring statements. Some of them:
    Back in the race.
    Greatest launch ever.
    Sales are fantastic.
    Selling like hot cakes.
    Sold out.
    Long lines and Q10 outsells iPhone and Samsung in UK and French.
    Firing all cylinder.
    Have a clear shot at being no 3 platform in the market.
    BB10 is stealing customers away from rivals.
    BB10 is the fastest growing ecosystem.

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