This shareholder class action lawsuit against Nokia is a load of bullshit.
First – I have to disappoint all the long-term Nokia shareholders who saw the value of their shares plummet since February 11th and “burning platforms” memo. This lawsuit is not about you. If you think this is the start of shareholder revolt that will bring a just comeuppance on Stephen Elop for destroying Nokia through his “criminal Trojan Horse tactics” and/or incompetence – ain’t gonna happen.
The lawsuit filed today is only for those shareholders who bought their Nokia stock from October 26th 2011, until April 10th 2012. From the day Lumia phones were announced at Nokia World – until the day before Nokia issued its profit warning. That’s it. If you didn’t buy any Nokia shares during that period – you can not be part of this lawsuit.
Now let’s look at the things Nokia is being sued for. They are all public statements made by Stephen Elop and Nokia CFO Timo Ihamuotila during various public appearances, describing how they believe the current Nokia strategy is proceeding. Here are some statements the laweyers highlighted in their complaint:
- Nokia and Microsoft have the right assets to win in this new game (battle of ecosystems) – Nov. 29th, 2011
- Operators are really backing this ecosystem – Nov. 29th, 2011
- Overall, we are pleased with the performance of our mobile phones business, which benefited in Q4 from sequential double-digit percentage growth in our dual SIM business, with particular strength in India, Middle East and Africa and South East Asia. Q4 earnings report, Jan 26th 2012
- We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed at Nokia. Q4 earnings report, Jan 26th 2012
- With Lumia we have demonstrated that we belong in the field. Q4 earnings report, Jan 26th 2012
- To date we have sold well over 1 million Lumia devices. From this beached of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful. Q4 earnings report, Jan 26th 2012
- In summary, with a strong balance sheet, our performance in mobile phones and new excitement around Lumia, we are confident that we are on the right track to build long-term value. Q4 earnings report, Jan 26th 2012
- The early reviews of Lumia 900 garnered an exceptionally positive pre-sales reception. Q4 earnings report, Jan 26th 2012
The lawyers also make the AT&T Lumia 900 data loss software glitch part of the lawsuit. Why? Because “Commentators speculated that Nokia had known about the glitch prior to (Lumia 900) launch”.
Do you really think any of the statements above are fraudulent? And, remember, if you are to be the part of this lawsuit – you have to have bought Nokia shares on the first day of Nokia World, at earliest. Already knowing all there is to know about February 11th, burning platforms and the strategy Nokia announced there.
Oh, and about the Robbins Geller Rudman&Dowd – the law firm that is suing Nokia? They seem to be a shop specializing in these class action suits – suing companies who’s share price went down by a lot for some reason. Only this year they seem to have filed 18 more similar cases already.
At this point, this lawsuit seems nothing more than a fishing expedition by lawyers out to make a quick buck. With very little benefit for shareholders. Even if Nokia decides to settle and ponies up few million bucks, the way these cases usually work, individual shareholders will most likely see very little of them. More often than not – the lawyers take about 30% of the settlement – so they end up happy with, say, a third of $10 million settlement. The rest gets divvied up among the thousands of shareholders who bought Nokia shares between Oct. 26th and April 10th. Most likely in proportion to the number of stocks they bought. So you end up with few cents per Nokia share, to compensate for your several dollars per share loss.
Well, at least one good thing may come out of this, if the case is not tossed out by the court or parties do not settle early. If the lawsuit proceeds – all kinds of internal Nokia documents may become public one day. And we may have a lot of fun with them eventually. Just look at all the fun Android stuff Oracle vs Google suit revealed.
But the chances of that happening seem almost non-existent at this point.
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