hiddenMar 14, 2015 09:19:24 IST
BlackBerry Ltd 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 smartphone line.
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.
Once known as Research in Motion, BlackBerry launched BlackBerry 10 in January 2013 in a bid to recoup market share lost to Apple Inc's iPhone, and Samsung Electronics Co Ltd devices powered by Google Inc's Android.
BlackBerry 10 won positive reviews, but low sales 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. The Waterloo, Ontario-based company ousted its chief executive officer, Thorsten Heins, less than two months later.
Shareholders led by Marvin Pearlstein accused BlackBerry in the lawsuit 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. Heins' successor John Chen has overseen a push at BlackBerry to cut costs, sell assets, and focus more on software and mobile device management.
The case is Pearlstein et al v. BlackBerry Ltd et al, U.S. District Court, Southern District of New York, No. 13-07060.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.