Lawsuit

BlackBerry wins dismissal of U.S. lawsuit over Misleading BlackBerry 10 prospects

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BlackBerry has won the dismissal of a U.S. lawsuit accusing it of fraudulently inflating its stock price by painting a misleadingly upbeat picture of the prospects for its BlackBerry 10 smartphones.

U.S. District Judge Thomas Griesa in Manhattan said the plaintiffs failed to show that BlackBerry and top officials materially misled them in touting how well customers were accepting the devices, and failing to take writedowns fast enough when sales proved disappointing.

Low sales of BlackBerry 10 smartphones led to a projected $930 million writedown for unsold inventory on Sept. 20, 2013, causing BlackBerry shares to lose about one-sixth of their value that day.

In the lawsuit, shareholders accused BlackBerry of overstating how well customers were “embracing” BlackBerry 10, and manipulating its books by recording revenue too fast and waiting too long to write off unsold inventory.

Griesa, though, said BlackBerry’s optimistic statements “fell far short” of being legally misleading, adding that “even a poor-selling device may still be embraced by customers and may still mark a transition for the company.”

He also said the plaintiffs did not show BlackBerry believed its accounting practices were wrong when it devised them, and that it is not enough to show they were wrong only in hindsight.

Lawyers for the plaintiffs and Blackberry did not immediately respond to requests for comment.

 

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