It has been a rough couple of years for Research In Motion (RIM), facing growing competition in the smartphone market. Shares in the company have fallen by a staggering 95 percent from the peak level in mid 2008. Last month they posted a $518 million quarterly loss, highlighting the dire situation right now for the once market leader.
Thorstein Heins, CEO of the company will hold the annual meeting soon, but he is unlikely to get a warm response from the shareholders. In fact, securities law experts and some investors claim that the company may be the target of shareholder lawsuits.
Jean Louis Gassee, the former president of Apple’s products division and the founder of software company BE said “They’re going to get sued and they should get sued because I think a closer look at the record is likely to unearth knowing and willful misrepresentation. When the CEO says there’s nothing wrong with the company as it is, it’s not cautious, it doesn’t make sense.”
Heins has also come under criticism for his recent radio interview last week with the Canadian Broadcasting Corporation. He denied there were problems and said “There’s nothing wrong with the company as it exists right now.” Many analysts and industry experts were dumbfounded by the comments.
Research In Motion issued a statement rejecting concerns that the company have misled investors “RIM is well aware of its disclosure obligations under applicable securities laws and is committed to providing a high level of transparency, as evidenced by RIM’s decision to issue an interim business update on May 29, 2012, to alert shareholders that it expected to report an operating loss.”
The Times of India add “While securities laws vary in Canada, where RIM is based, and the US, where its stock is also traded, companies are generally required to promptly report any developments that may significantly alter their financial state. The BlackBerry 10 delay is unquestionably such a change, Canadian and US law experts said.
Any shareholder class action would also have to show that Heins or others within RIM knew that a delay was likely or a strong possibility when he was publicly boasting about the product’s progress and promising on-time delivery.
The legal experts said repeated statements earlier this year by Heins and other senior RIM executives – that the BlackBerry 10 line of phones would arrive in stores as planned by the end of this year – could support this claim.”
Many experts feel that the Blackberry 10 operating system is already too late to market. They will be facing competition from the next generation of Apple, Microsoft and Google based phones.
Kitguru says: Can Research In Motion survive in such a competitive market and turn their fortunes over the coming year?