Shareholder hits Nokia with class-action suit for poor Lumia sales

By Lee Kaelin on May 8, 2012, 4:00 PM

One of Nokia's angry shareholders, Robert Chmielinski instructed law firm Robbins Geller Rudman and Dowd to file a class-action lawsuit (PDF) in a New York court against the firm, claiming it misled investors with promises that the partnership with Microsoft to sell Windows Phone 7 handsets would be more successful.

In the papework filed, Nokia is accused "talking up" the Lumia products' chances of turning around the company's fortunes. "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," said lawyers representing Chmielinski.

The law firm argues that this became apparent on April 11, 2012, when Nokia disclosed that its first quarter performance would be worse than expected. Nokia expected its first quarter 2012 non-IFRS Devices & Services operating margin to fall by 3 percent, and projected first quarter 2012 Devices & Services net sales of €4.2 billion, a 40 percent drop on the previous year on year revenue generated in 2011,

They also made reference to the post US launch Lumia 900 data connectivity bug, which resulted in the struggling Finnish phone giant offering a $100 rebate to those who purchased them, as well as those yet to order them. What is potentially even more damaging however, is Chmielinski's claim that CEO Stephen Elop and CFO Timo Ihamuotila were aware of the problem before the phone was released on general sale.

Nokia issued a statement to the Inquirer in regards to the lawsuit. "Nokia has become aware of the filing of a securities class action complaint naming Nokia Corporation as a defendant, filed in the US District Court for the Southern District of New York on May 3, 2012, [we're] reviewing the allegations contained in the complaint and believe that they are without merit. Nokia will defend itself against the complaint."

Whilst announcing disappointing first quarter results, as well as its head of sales leaving, Elop did comment that the firm is still in the midst of transition, which is evident in the Q2 projections. Despite their efforts, Nokia's stock price continues to tumble alongside constantly reducing worldwide Symbian handset sales.




User Comments: 9

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backo said:

Man, Nokia can't catch a break. I have a Lumia 800 and I am very happy with it.

yRaz yRaz said:

Man, Nokia can't catch a break. I have a Lumia 800 and I am very happy with it.

I've been looking very seriously at the 900 as an upgrade from my LG quantum(C900). I think most people are too fanboyish or stubborn to give WP7 try.

Scshadow said:

Man, Nokia can't catch a break. I have a Lumia 800 and I am very happy with it.

I've been looking very seriously at the 900 as an upgrade from my LG quantum(C900). I think most people are too fanboyish or stubborn to give WP7 try.

So we're supposed to discontinue using the phones we know we like and are completely satisfied with (in my case Android) and then buy a windows phone. Alright, fine, call me a fanboy. WP7 has no appeal to me. If I could dual boot it on my inspire then I'd give it a try... fat chance of that happening. To invest in hardware that runs wp7 and know that if I didn't like it, I'd have trouble reselling it near its original price, would be stupid.

Back on subject though, since when can investors sue a company when a product doesn't sell well? Well they did claim the connectivity was a known issue but I'm pretty sure you have to prove 2 things. 1: That it was actually a known issue(to prove negligence) and good luck finding evidence of that 2. and you have to prove that the crappy sales are a result of that defect(to prove damages as a result of negligence). Which clearly isn't the case. I think I represent many people out there because the market is mostly satisfied with either iOS and Android. Shareholders are really really stupid if they thought WP7 and Nokia was going to be a quick success. Its an uphill battle.

Archean Archean, TechSpot Paladin, said:

@Scshadow

Every OS took its time to get mature and get where it is now, the same is with WP. In fact android wasn't a good copy of iOS until it got to 2.x.

I think the best template in this regard is Apple, it develops the OS which is user centric keeping in view the most 'optimal' hardware to run it. Whereas, Android being 'not so efficient' is always in need of 'brute force' hence the higher specs in general. So IMHO, for any one to make 'money' they should take a closer look at Apple.

I think Samsung is starting to realize this, although it is not a software company, it will at some point will need to take full control of OS it puts on its devices to compete with Apple, hence, I suspect they may fork out their own android version with others following soon. As things stand, Google may have taken first step to 'end open source tag' of Android by declaring the Galaxy Nexus version 'trade secret' (or to perhaps safeguarding itself from more 'patent theft' accusations?).

Red87 said:

There is literally no reason to buy a Lumia 900 right now. With Windows Phone 8, or Apollo, on the horizon most likely this year, investing in a Lumia 900 is pretty much a dead end track. All signs and several unconfirmed Microsoft insiders have pretty much said current single core WP7 phones won't be compatible with or won't run well on Apollo - it's an entirely new kernel and is being designed for multi-core phones, so the performance would probably be substandard.

The Lumia 900 is a great phone but it's WP7 OS is going to be at the end of its lifetime half a year after it launched. Really bad timing, I'd say.

Wagan8r Wagan8r said:

I find it strange that you use non-existent Nokia Windows Phones for your article image; as though it's hard to find images of their four existing models...

Leeky Leeky said:

I personally hope that Nokia can make inroads from here and actually start challenging iOS and Android on a larger scale.

While it doesn't suit everyone, Windows Phone is very good, and provides a much smoother experience than Android does. It also crashes a lot less as well (as in never!). I've not used iOS in a little while (iOS 4.2 was last I think) but that also provided a smooth experience and it cannot be denied that iOS has a fantastic and easily understood UI.

That said, I'm now on my third Windows Phone (Samsung Omnia 7, Nokia Lumia 800 and now using a Nokia Lumia 710) and now that the apps I regularly use are available on WP7 I find myself much happier using it. The issue for me had always been the lack of apps, and while they still have a long way to go to the point of Apple/Google's app portfolio, I much prefer using my Windows Phone.

Previous to that I used iPhones, then moved onto Android (had many models, most notable HTC Desire, SGS2, several Xperia models etc), and the UI and general usability is considerably better than Android. I'm yet to try ICS, however.

The irony here... I never thought I'd find myself in a position where I *wanted* a Microsoft product over an alternative. Windows would be long gone if it wasn't for the simple fact I like to game on my PC.

Leeky Leeky said:

I find it strange that you use non-existent Nokia Windows Phones for your article image; as though it's hard to find images of their four existing models...

It was just a stock image we already had server-side. Point noted though, I'll refrain from using it in future as you have a valid point. I'll also change the picture now.

Archean Archean, TechSpot Paladin, said:

@Leeky

I have, an iPhone 4S running iOS 5.1, and TBH even ICS is rubbish (but better than GB) when compared with its ease of use, natural flow, stability. Simply put iOS and WP are mobile operating systems with beautiful UI/performance etc.

I never liked to pay 'extra' for apple products, hence, I don't buy them. I would never again want to waste my money on an android smartphone (I guess spending on 6 of them is enough). So that leave me with one 'potent' choice I guess, if all else fails.

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