Seems like Nokia promises of new product does not fit in the eyes of the investors that is why the Finnish mobile giant has been hit today with a class-action lawsuit over the false promise it could not able to make up. The law firm name Robbins Geller Rudman & Dowd (RGR&D) yesterday filed a class-action lawsuit (PDF) against Nokia and its executives on behalf of those who owned the company’s shares between October 26, 2011 and April 10. The lawsuit was filed in the U.S. District Court for the Southern District of New York.
“The complaint alleges that during the Class Period, defendants told investors that Nokia’s conversion to a Windows platform would halt its deteriorating position in the smartphone market. It did not,” the law firm wrote in a statement. “This became apparent on April 11, 2012, when Nokia disclosed that its first quarter performance would be worse than expected.”
The company recently posted its Q1 2012 financial reports, noting an operating loss of €1.3 billion that led to a net loss of €590 million for the period. The company even earlier warned that it would not be able to maintain its earlier forecast resulting into huge damage. Nokia sold 11.9 million smart devices during Q1, which is less than half of the 24.9 million it achieved in the first three months of 2011.
“Our disappointing devices and services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our business continues to be in the midst of transition,” Elop wrote to investors last month. “Within our Smart Devices business unit, we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success.”
Even Fitch downgraded rating and Samsung overtook and becomes world’s biggest phone manufacturer, as well as Standard & Poor’s downgraded Nokia’s rating from a low investment-grade prospect of BBB- to a non-investment (“junk”) one of BB+ in its long-term forecast.
With all the condition aroused, the class-action suit alleges that due to declining margins in the company’s Device and Sales division there is no momentum that the company will make it big. Therefore, the suit argues, shareholders should receive damages from Nokia for its troubles over the last six months.
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