Did Nokia Mislead Investors?
A Nokia (NYSE:NOK) investor is taking the company to court, alleging it made misleading statements to shareholders about the potential of its partnership with Microsoft (NASDAQ:MSFT). The class action lawsuit, filed in the U.S. District Court for the Southern District of New York, alleges that Nokia violated federal securities laws by convincing investors that its conversion to a Windows Phone platform would halt its weakening position in the smartphone market, but it did not.
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However, Nokia reported a worse than expected first-quarter performance last month, saying its devices and services operating margin fell by 3 percent, the complaint added.
Nokia, struggling to regain its status as a mobile market leader as Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) Android smartphones change the industry, launched the Lumia 900 along with Microsoft and AT&T (NYSE:T) in April with extensive marketing. While the phone was reported to have sold out on online stores, a software glitch that emerged soon after caused Nokia bad publicity. While the issue was fixed, the company was forced to offer a full refund to some customers.
“It [Nokia] disclosed a glitch in its newest Windows offering – the Lumia 900,” the complaint says. “Nokia had to immediately offer customers an automatic $100, making the phone essentially free. As a result of this disclosure, the price of Nokia’s American Depositary Shares (‘ADRs’) dropped over 16 percent in a single day.”
The investor, Robert Chmielinski, is seeking unspecified damages for all individuals and institutions that owned Nokia shares during the class period. Nokia said in a statement that it would defend itself against the complaint in court.
Nokia had released its Lumia line in Europe in November and is preparing to launch the latest phone, Lumia 900, in the UK this week.
The company is already in court in the U.S. and Germany after having filed patent infringement suits against HTC, Research In Motion (NASDAQ:RIMM), and ViewSonic.