When it rains, it pours, and for BlackBerry, the negative news keeps on pouring recently. Today, a class action lawsuit has been filed against BlackBerry claiming the company mislead its investors into believing BB10 would bring the company back to profitability, when in reality, it made things worse.
If you're a shareholder, and want to know more about the suit, check out the full press release below.
Kahn Swick & Foti, LLC and Former Louisiana Attorney General File Suit Against BlackBerry Limited: Remind Investors With Large Financial Interests of Important December 3, 2013 Deadline - BBRY
NEW ORLEANS, LA--(Marketwired - October 04, 2013) - Kahn Swick & Foti, LLC ("KSF") and KSF partner, Former Attorney General of Louisiana Charles C. Foti, Jr., announce the commencement of the firm's securities class action lawsuit against BlackBerry Limited ("BlackBerry" or the "Company") (NASDAQ: BBRY). The lawsuit was filed in the United States District Court for the Southern District of New York on behalf of purchasers of BlackBerry common stock between September 27, 2012 and September 20, 2013 (the "Class Period").
What You May Do
If you are a BlackBerry shareholder and would like to discuss your legal rights and how this case might affect you and your right to recover for your economic loss, you may, without obligation or cost to you, e-mail or call KSF Managing Partner, Lewis Kahn (firstname.lastname@example.org), or KSF Partner Melinda Nicholson (email@example.com), toll free at 1-877-515-1850. If you wish to serve as a lead plaintiff in this class action by overseeing lead counsel with the goal of obtaining a fair and just resolution, you must request this position by application to the Court by December 3, 2013. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. KSF encourages both institutional and individual purchasers of BlackBerry to contact the firm. The ultimat e resolution of any securities class action is strengthened through the involvement of aggrieved shareholders and lead plaintiffs who have large financial interests. KSF also encourages anyone with information regarding BlackBerry's conduct during the period in question to contact the firm, including whistleblowers, former employees, shareholders and others.
About the Lawsuit
BlackBerry and certain of its officers and directors are charged with making a series of materially false and misleading statements and omissions related to the Company's business and operations in violation of the Securities Exchange Act of 1934. Specifically, BlackBerry failed to inform investors that, contrary to the Company's statements that its new BlackBerry 10 line of smart phones financially strengthened BlackBerry and positioned the Company on the road to recovery, BlackBerry's business, operations and financial situation was made even worse by the introduction of the BlackBerry 10 platform, which was poorly received by the market.
On September 20, 2013, BlackBerry announced the true state of the Company, which incurred massive charges due to unsold BlackBerry 10 devices and was forced to lay-off approximately 40% of its workforce. In relevant part, the release explained:
[The Company] expects to report a primarily non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately $930 million to $960 million, which is primarily attributable to BlackBerry Z10 devices.
Furthermore, the Company also announced that it is targeting an approximate 50% reduction in operating expenditures by the end of the first quarter of Fiscal 2015. As part of this, BlackBerry will implement a workforce reduction of approximately 4,500 positions or approximately 40% of the Company's global workforce resulting in a total workforce of approximately 7,000 full-time global employees.
As a result of the foregoing disclosure, BlackBerry stock plummeted from a closing price of $10.52 per share on September 19, 2013 to a close of $8.73 per share on September 20, 2013. The value of BlackBerry stock continued to slide on heavy trading volume over the next few days as investors digested the bad news, and closed at $8.01 on September 25, 2013.