Nokia class action securities fraud lawsuit is big news in Finland

Last Updated on Friday, 26 February 2010 09:43 Written by info Friday, 26 February 2010 09:43

The securities fraud class action lawsuit pending in U.S. courts is all over the Finnish business papers.  For example, this article in Helsingin Sanomat describes the class action:

The mobile telephone giant Nokia faces a class-action suit in the United States. The suit was filed on behalf of investors on Friday last week in a US district court in New York. It concerns statements given out by the company in January and September of 2008 on the production volume of mobile telephones.
Nokia issued a statement on the lawsuit, saying that the accusations are without merit. The company plans to fight the demands by all means available.

According to the suit, Nokia failed to disclose its shortage of components and its production problems in the early part of 2008 when it presented its new products.
The plaintiffs also say that Nokia failed to disclose a decline in its market share as its competitors were slashing their prices, and as its average sales prices were declining.
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The class-action suit is being pursued by the law firm Coughlin, Stoia, Geller, Rudman & Robbins on behalf of the pension fund of the municipal employees of the city of Roseville.
Nokia has faced similar class-action suits in 1995 and 2004. Both times the suits did not go to court, because they were rejected as being without merit.

Nokia lawsuit complaint: summary of the case

Last Updated on Tuesday, 9 February 2010 04:42 Written by info 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.