Nokia Faces Shareholder Lawsuit Over Windows Phone Deal, Poor Results

Nokia defended itself against unhappy shareholders in a May 3 annual meeting, and may do the same in court, as it faces a class-action complaint accusing it of misleading investors. Nokia has the complaint is "without merit."

Nokia plans to €œdefend itself€ against a class-action complaint filed May 3 by several disgruntled shareholders. The Finnish smartphone maker, which recently watched its 14-year reign as the global leader of mobile phone shipments end, said it is €œreviewing the allegations contained in the complaint and believes that they are without merit.€

The lawsuit was filed in a U.S. District Court for the Southern District of New York by Robert Chmielinski, according to Barron€™s, and claims that Nokia misled investors.

€œDefendants told investors that Nokia€™s conversion to a Windows platform would halt its deteriorating position in the smartphone market. It did not,€ according to the report.

The complaint follows Nokia€™s Annual General Meeting (AGM), held May 3 in the company's hometown of Espoo, Finland. During the gathering, Nokia CEO Stephen Elop and outgoing chairman Jorma Ollila likewise expressed disappointment in Nokia€™s first-quarter performance.

"Like you, we were disappointed with our financial results over the last year and most notably during the first quarter,€ Elop said when he took the stage. €œIt reflects both the transition that Nokia is currently undergoing as well as the increase in competitive pressures within our industry.€

Ollila was CEO of Nokia from 1992 through 2006, years that included its arrival at the top of the market in 1998, and leaves on a low note. A recent survey by broadcaster YLE found 40 percent of analysts rate Ollila€™s 13-year performance as €œpoor€ or €œunacceptable.€

Ollila has also defended his decision to take on a chairman position at Shell Oil while serving at Nokia€”a time some have pointed to as a downward turning point for Nokia€”saying that it€™s common for two such positions to be held at once. By one estimate, the two positions paid Ollila a joint salary of approximately $1.6 million dollars U.S.

€œThe transformation period is truly painful,€ Ollila told shareholders. €œWe cannot be satisfied with our economic performance or that so many Nokia workers have had to leave the company because of the changes.€

Heading into the meeting, Ollila told reporters that Nokia was working on several new devices, including tablets€”a form factor noticeably missing from the Nokia arsenal as it works to defend its slipping market share against Apple and vendors supporting Google€™s Android operating system€”and €œhybrid€ smartphone-tablet devices.

Formally, however, the company has made no such announcements, and it quickly downplayed Ollila€™s comments as €œmisconstrued.€ Nokia spokesperson Keith Nowak additionally told eWEEK by email, €œAs we have been saying, we are watching the space with interest, but have made no announcements regarding a tablet product.€