BlackBerry and its executives are being being sued by a shareholder.
The class action lawsuit accuses Blackberry of inflating its stock price by implying business prospects of the company’s new smartphone line were misleadingly positive.
Lodged in a Manhattan court by shareholder Marvin Pearlstein, the lawsuit seeks to represent a class of thousands of shareholders: those who bought the stock between September 27 last year—when BlackBerry bragged of a strong financial position—and September 20 of this year, when the company was hammered by a $1 billion tax loss.
“In reality, the BlackBerry 10 was not well-received by the market, and the company was forced to … lay off approximately 4,500 employees, totaling approximately 40% of its total workforce,” the complaint alleges.
The company recorded revenue from the sale of 3.7 million smartphones during last quarter. The majority of those sales were BlackBerry 7 devices, not the new Z10. The company said that revenue for sales of the new devices, which were shipped to carriers, won’t be recorded until they’re sold to end-users. In total, 5.9 million BlackBerry devices were sold to end-users during the period.
BlackBerry still has $2.6 billion in cash and investments, but its burning through that fast. The company spent $500 million of its cash on-hand during the quarter.