A BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shareholder has filed a lawsuit against the Canadian company, claiming that it made false and misleading claims which pumped up its stock price. CNET’s Steven Musil reports on court documents which state that Marvin Pearlstein filed the suit Friday in Manhattan federal court.
BlackBerry accused of inflating financial situation
The suit alleges that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) falsely claimed that it was making progress on its operational and financial commitments. It also says the struggling company claimed its BlackBerry 10 operating system had been well-received by developers who had previewed it.
In addition, it accuses CEO Thorsten Heins of misleading investors on a conference call in September 2012. He said that the company was still “a financially strong company” and that they were “executing and delivering” on their commitments. He also said that the company was still “a strong, innovative and relevant player in the mobile computing world.”
BlackBerry not on the road to recovery
According to the plaintiff in the case, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was actually not heading for recovery and regaining its position as a lead player in the industry. He notes that when BlackBerry 10 actually came out, the market did not receive it very well, and in its latest earnings report, the struggling company had to write down almost $1 billion in connection with BlackBerry 10 inventory. It also had to lay off about 4,500 employees, which is about 40 percent of its workforce.
In addition to BlackBerry itself, the lawsuit also names CFO Brian Bidulka as a co-defendant. The court filing shows that the plaintiff is trying to represent shareholders of the company who bought the stock between last September when those statements were made and September of this year when the heavy losses were reported.
Recently BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) hung the “For Sale” sign out, saying it was looking for strategic alternatives. Then a consortium led by Prem Watsa’s Fairfax Financial, which is also the company’s biggest shareholder, made an offer of $9 per share.
This morning though, shares of Blackberry have risen more than 4 percent in spite of the lawsuit after Reuters reported that the company was in talks with Google Inc (NASDAQ:GOOG), Cisco Systems, Inc. (NASDAQ:CSCO) SAP AG (NYSE:SAP) and other big names in the tech industry.
