Shareholders have accused Nokia of giving them misleading assurances about the company’s plans to switch to Windows Phones platform to bring an end to their miserable position in the market. Nokia will now defend itself against the complaint filed by their investors.
Nokia, which led the market as the best handset maker for 14 years, was recently beaten to the top spot by Samsung. Further bad news has come in the form of rating agencies reducing their once-glorious credit ratings to junk. Shareholders are fast losing patience and have now expressed their discontent. They have filed a lawsuit in a district court in US on the basis that Nokia has misled investors. The lawsuit states that as opposed to tall claims by Nokia, their switch to the Windows Phones platform following their collaboration with Microsoft has failed to perk up their weakening position in the market. Nokia believes these allegations lack merit.
Shareholders probably sensed trouble during Nokia’s annual general meeting last week wherein CEO, Stephen Elop and ex chairman Jorma Ollila, both expressed concern regarding Nokia’s disappointing performance and the fact that several prominent executives had resigned. They blamed it on the transitional phase that the company is supposedly going through along with increasing competition. Ollila was criticized for his performance as the chairman of Nokia by analysts. He chose to take on the chairmanship of Shell Oil along with Nokia and was being heavily paid for the same. That period also marked the turning point for Nokia when the company began to falter.
Ollila had earlier assured reporters that Nokia was working on new devices along with tablets and hybrid smartphone-tablet devices. This venture is going to be Nokia’s first as they try to match up to competition from Apple and Google. However, since the company did not make any such formal announcements, Nokia has clarified that Ollila’s comments have been misinterpreted. According to their spokesperson, Nokia is still yet to formally decide on the issue of tablets.
Though Nokia’s sales went down by 29%, they have apparently sold 2 million handsets of their new range of Lumia smartphones already. The company is trying to focus on working on responding to challenges at a faster pace, according to Elop. Nokia’s board of directors has been revamped with Siilasmaa stepping in as the new chairman. The board has been authorized to repurchase up to 360 million Nokia shares to develop capital structure, finance acquisitions and to settle the company’s incentive plans and such.
