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Nokia Faced with Lawsuit from Angry Shareholders
On May 3, 2012 disgruntled Nokia shareholders filed a class action lawsuit against the communication giant in U.S. District Court for the Southern District of New York. The lawsuit stems from Nokia’s failed attempt at rivaling the iPhone with its Lumia 900 Windows-based smartphone. The lawsuit alleges that Nokia assured shareholders that the Lumia would revive Nokia’s presence in the competitive smartphone market. The Lumia failed from the beginning and shareholders accuse Nokia of misleading them.
The key element to the shareholders’ lawsuit is the allegation that Nokia knew they were making misleading statements in order to artificially inflate the price of Nokia’s securities. The plaintiffs claim Nokia shipped the phone to market with a glitch. Nokia had to refund $100.00 to each of its customers because of the glitch. In all, Nokia lost $1.7 billion on the Lumia.
Nokia sold approximately two million Lumia smartphones in the first quarter of 2012. By comparison, Apple sold about 35 million iPhones in the first quarter of this year. Analysts say it is too early to close the lid on the Lumia, as it takes awhile for a new smartphone to catch-on with consumers.
For its part, Nokia commented that the securities class action lawsuit is without merit.
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