[the_sleuth]

Jonathan Ratner Jul 27, 2011 – 9:40 AM ET | Last Updated: Jul 27, 2011 9:50 AM ET

Motorola Solutions Inc. failed in an attempt to dismiss a class-action lawsuit led by two Michigan pension funds, claiming the mobile phone maker hid key information about its ability to keep up with competitors such as Nokia and Samsung.

On Tuesday, U.S. District Judge Amy St. Eve in Chicago said there is a “genuine dispute” as to whether the company misled shareholders.

This decision is raising concern that Research In Motion Ltd. may suffer a similar fate. In May 2011, the BlackBerry maker was hit with a lawsuit in the District Court for the Southern District of New York, which alleges RIM made “materially false and misleading statements regarding the Company’s financial condition and business prospects” between December 16, 2010 and April 28, 2011.

The company revised its first quarter 2012 guidance lower on April 28, 2011, less than four weeks after issuing the prior guidance, according to Sameet Kanade, analyst at Northern Securities. He noted that RIM further reduced its fiscal 2012 guidance again on June 16, 2011.

“We highlight that the disappointing results during the last 2-3 quarters are in stark contrast to management’s bullish assertions,” Mr. Kanade told clients.

Recent announcements related to cost reductions and management changes, combined with further losses in smartphone market share and a lack of meaningful penetration in the tablet market, suggest expectations for the potential success of the QNX-based devices may be too bullish, he said.

“The MSI related announcement further complicates matters, in our opinion, as we cannot rule out a similar ruling in the RIM case,” the analyst said. “We believe a potential negative ruling may cause further deterioration in fundamentals.”

Meanwhile, UBS analyst Phillip Huang cut his price target on RIM shares to US$30 from US$41.

Mr. Huang said the stock may look cheap relative to analyst estimates, but he continues to lack visibility into normalized earnings power and continues to foresee challenges for RIM in the platform wars against Android and iOS (Apple), and conceivably Microsoft in 2012.

“While the introduction of new BB7 devices could reverse some of the negative momentum, a more meaningful transition is likely to occur with QNX in 2012 though execution risk is high and success likelihood unclear,” he added.

Will RIM suffer the same class-action fate as Motorola? | FP Tech Desk | Financial Post

More info on lawsuit here:

Motorola bid to dismiss 3G phones lawsuit fails - BlackBerry Forums at CrackBerry.com

[gord888]

So, in the US you can sue a company for making bad estimates? Then, when they are in a time of transition and need to focus, do they think suing a corporation will really help their investments?

[Economist101]

So, in the US you can sue a company for making bad estimates? Then, when they are in a time of transition and need to focus, do they think suing a corporation will really help their investments?

There's a world of difference between "bad estimates" (what you said) and "intentionally misleading investors" (what the lawsuit alleges).

[waccotobacco]

I wouldn't doubt that they mislead investors. After all, the CEOs stated at the shareholder's meeting that the reason for the OS 7 delay was carrier compliance..

[Mvor7]

Suing is the ultimate expression of that oh-so-american feeling of entitlement. Life's a *****. It's not fair. Deal with it.

[gord888]

There's a world of difference between "bad estimates" (what you said) and "intentionally misleading investors" (what the lawsuit alleges).

stuck between a rock and a hard place it seems... either say you're incompetent by not being able to provide long term estimates, or be a liar by misleading investors. ... i wouldn't like my choices.

it's like being accused of beating your wife... regardless of if you're guilty or not, the perception will forever linger.

[WillieLee]

RIM gave an earnings warning when they learned that OS 7 devices would be delayed. They've given earnings warnings before when their guidance was going to fall short.

[Philldoe]

The Stock Market. It's F*cking retarded...

[Rootbrian]

The Stock Market. It's F*cking retarded...

indeed. It's like riding a bike down or up a steep hill. You just never know what angle it'll be. Either you'll fly down at top speed, or you'll be walking that bike up the hill.

Posted from my CrackBerry at wapforums.crackberry.com

[JasW]

This is the last place I would come to for any kind of cogent analysis of class action securities litigation.

[Amy wineBerry]

This is the last place I would come to for any kind of cogent analysis of class action securities litigation.

It would make a pretty good securities exam hypo since the article itself is pretty ambiguous. State the issue, rule, analysis, and likely conclusions. But, yes, CrackBerry is likely not the place to come for a cogent analysis. :-/

Posted from my CrackBerry at wapforums.crackberry.com

[Shlooky]

I say RIM should become a privately held company, no more shareholder and analyst headaches.

[OnTopic]

I say RIM should become a privately held company, no more shareholder and analyst headaches.

Yup that's the solution. HIDE the truth.