Nokia dinged with shareholder lawsuit over poor Lumia sales
Finns: Allegations are 'without merit', we will defend ourselves
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As sure as rain follows a Met Office drought warning, we can expect a share price crash to be followed by a shareholder lawsuit. Now it's Nokia's turn.
A class action suit naming Nokia's CEO Steve Elop, and CFO Timo Ihamuotila has been filed by New York law firm, and serial class action rottweilers, Robbins, Geller, Rudman & Dowd. It claims that Nokia acted fraudulently when it failed to "halt its deteriorating position in the smartphone market" but did not tell shareholders. Not surprisingly, Nokia issued a statement saying that the claims "are without merit" and the Finnish firm will contest the suit.
When Elop announced the first Nokia Windows phones last October, Nokia's share price hit $7.31 per share. But after the last quarter's results the share price crashed to $4.24.
"Two million Lumias in three months is not encouraging; that’s the same number that the Nokia N97 (a product which was a large-scale failure) shipped back in 2009, in first three months," the plaintiffs allege. "Today, if you bring a hit product to market, 5 million in three months should not be a problem (Samsung Galaxy S2). In addition, 10 million Symbian smartphones shipped was expected, but the 16 per cent gross margin in smartphones says these phones were shipped with big discounts in order to defend market shares."
Nokia's most recent loss was caused not by under-performing smartphones, but by a collapse in volumes and margins of its midrange products, particularly those in Asia. As the company put it, "lower seasonal demand for our feature phones and aggressive price competition".
This isn't mentioned in the lawsuit. Nor is an explanation of why sales of Symbian smartphones should have been maintained when Nokia had nothing new to offer its customers at the budget end of the market. ®
COMMENTS
Re: Right idea wrong choice
Spot on. And that's what the legal beagles should be suing Elop and those who appointed him for.
A decade after Gerald Ratner demonstrated that a business can't survive if the CEO speaks out against his own product, Elop comes in, pisses all over the existing assets of Nokia, and thinks it will all work out by outsourcing 100% of future phone software to Microsoft, and as far as I can see, outsourcing almost all remaining in house phone manufacture to the far east. What does that leave him with, apart from a big fat undeserved pay packet?
The answer to that should be that Nokia is a brand. But having emptied his own bladder all over it, he's got one hell of a job to turn that around. Added to which if you want to be a successful phone handset maker, you need some worthwhile asset beyond a brand. There are some brands (eg BMW) that could put their label on a turd and still sell it - but that's not some abstract concept of brand, it is built and maintained by the standard of most of its products. Take that away and the brand soon fades.
In the case of fast moving technology products, there's a need not just for adequate quality, but critically for continuous change and innovation. Apple (for all the fact that I wouldn't buy their products) are a very innovative firm. Samsung and LG are very strong in screen technology. Sony offer quirky for those that want it.
What, with no in house software, overlooking a few old patents are Nokia bringing to the party (overlooking a bag of old patents)?
Well they're kinda right, apart from the bit about "Did not tell share holders".
It was blindingly obvious from the point when they made the deal with the beast onwards.
Re: If Android was Linux
@A/C 21:01
So you're saying Android is a copy of iOS and that is why Oracle are dragging Google to court... So in your world Oracle wrote iOS?
The reason Oracle are upset is that Android phones run a Javaesque virtual machine called Davlik. This allows apps to be written once and run on lots of different hardware.
iOS and Android do have quite a few similarities, but that is because they have the same great grandfather, Unix. Android is a branch of Linux which was inspired by Unix.
iOS comes from OSX which comes from NextStep BSD which is Unix.
Yes, google does collect information, but at least there are tick boxes and warning that wifi info will be sent back. iOS did exactly the same, but didn't provide any such warning. Both do it for the same reason, to improve A-GPS.
Oh you know what, I can't be bothered to feed the flame baiting any more.
Come back when you've worked out how to be a real troll.
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