Nokia will fight a class-action complaint accusing the mobile phone maker of making false and misleading statements in violation of the US Securities Exchange Act of 1934.
The suit was filed by Irving Greenfeld on behalf of himself and "all others similarly situated", in the US District Court for the Southern District of New York on the same day Nokia announced it would miss its net sales forecast for the first quarter due to falling handset sales in Europe and Asia.
The company said it expected a 2 per cent decline in net sales to $US7.9 billion (as of March 31, the last day of the period being reported), despite having previously forecasted growth of between 3 per cent and 7 per cent for the period. Nokia, the world's largest mobile phone maker, blamed the decline on its inability to respond quickly enough to changing trends in demand for mobile phones.
After the revised forecast was announced, Nokia's stock price on the New York Stock Exchange fell 19 per cent to $US17.21 per share. In a statement, Nokia said it believed the claims in the complaint are without merit and that it would defend itself vigorously against the charges. A spokesperson for the company declined to comment any further on the case.
The law firm of Milberg Weiss Bershad Hynes & Lerach is overseeing the class action complaint, which also accuses Nokia chief strategy officer Matti Alahuhta, Nokia president Pekka Ala-Pietila, Nokia chairman and chief executive officer Jorma Ollila and Nokia chief financial officer Richard Simonson of violating various strictures of the Securities Exchange Act of 1934.
Specifically, the suit claims that between January 8 and March 25, when the defendants spoke of the company's positive outlook for the period, they were knowingly making "materially false and misleading statements". According to the claim, the company was aware its financial outlook was less than sunny because for one, Nokia "was losing market share at an alarming rate in Asia and other significant markets because of Nokia's failure to keep apace with changing trends in customer demands, and in particular, Nokia's failure to introduce the so-called 'clamshell handsets' popular in markets such as China and becoming increasingly popular in Europe," the claim reads.
Nokia also knew its effort to restructure its handset division so as to target and cater to specific user preferences had failed and that the company was suffering from "deficient and inadequate controls and financial systems", the claim reads.
Representatives from Milberg Weiss Bershad Hynes & Lerach could not immediately be reached for comment.
In its own statement, the law firm urged people who had bought securities of Nokia between January 8 and April 6 to join the class action complaint. Though the law firm said it was pursing "remedies" from Nokia on behalf of purchasers of Nokia securities in that time frame, the company did not disclose any specific figures.