Nokia (NOK) securities fraud lawsuit

Nokia lawsuit complaint: summary of the case

Last Updated on Tuesday, 9 February 2010 04:42 Tuesday, 9 February 2010 04:41

Here is how one of the Nokia securities fraud lawsuit complaints summarizes the nature of the case against Nokia:

NATURE OF THE CASE

1. This is a federal securities class action on behalf of purchasers of the American Depository Shares (“ADS”) of Nokia between January 24, 2008 and September 5, 2008, inclusive (the “Class Period”), against Nokia and certain of its officers for violations of the Securities
Exchange Act of 1934 (“Exchange Act”).

2. Over its 142 year history, Nokia has evolved from its origins in the paper industry to become a world leader in mobile communications. Today, approximately a billion people around the world use Nokia mobile devices.

3. In early 2008, Defendants became aware that Nokia was likely to experience production related delays associated with its mid-price range cellular phones, including certain of its smart phones. Defendants hid this fact from investors and instead highlighted the Company’s expected launch of several new phones.

4. Facing increasing competition, especially from manufactures in the Asian-Pacific region, Nokia began to slash prices in an attempt to maintain its industry leading market share.

5. As the Class Period progressed, the product supply and other manufacturing problems Nokia experienced with the production of its mid-priced cellular phones caused it to push back the launch of one, high end mid-priced phone. This delay, coupled with Nokia’s aggressive price cutting strategy caused the average selling price (“ASP”) of it cellular phones to decline significantly, from EUR 79 in Q1 of 2008 to EUR 74 in Q2 of 2008 to EUR 72 in Q3 of 2008, as
Nokia was forced to sell a greater percentage of lower priced phones.

6. The decline in Nokia ASP adversely impacted the operating margins of the Company’s highly profitable Devices and Services segment, which, excluding special items, also declined during the Class Period, from 21.2% in Q1 of 2008 to 20.1% in Q2 of 2008 to 18.6% in Q3 of 2008.

7. By the end of the Class Period, the price of Nokia’s ADS had fallen from a Class Period high of $38.25 to $20.62.

Nokia stock chart during lawsuit class period

Last Updated on Tuesday, 9 February 2010 04:30 Tuesday, 9 February 2010 04:30

In the beginning of the class period on January 24, 2008, Nokia ADS shares traded in the high $30s, peaked above $38, then began to decline.  At the end of the class period, shares dropped approximately 8% on heavy volume.

Nokia responds to securities fraud lawsuit

Last Updated on Monday, 8 February 2010 11:05 Monday, 8 February 2010 11:05

Nokia wasted no time issuing a press release saying the securities fraud claims filed against it were “without merit.”

According to Nokia,it  “has reviewed the allegations contained in the complaint and believes that they are without merit. Nokia intends to defend itself against the complaint vigorously.”