BlackBerry hit with securities shareholder class action

Fri Oct 4, 2013 9:32pm EDT
 
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* Suit alleges company misled investors on financial strength

* CEO Heins, CFO Bidulka also named as defendants

* Company accepted $4.7 billion tentative offer from Fairfax Financial

By Nick Brown

NEW YORK, Oct 4 (Reuters) - 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.

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.

"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.

In addition to BlackBerry, Chief Executive Thorsten Heins and Chief Financial Officer Brian Bidulka are named as defendants. A spokeswoman for BlackBerry declined to comment.   Continued...