Ericsson Faces Investor Lawsuit
8:45 AM -- Having already kicked its CFO into touch, Ericsson AB (Nasdaq: ERIC) faces further repercussions from this month's profits warning. (See Ericsson CFO Steps Down and Profit Warning Slams Ericsson .)
Late on Monday, law firm Coughlin Stoia announced that a class action lawsuit has commenced on behalf of disgruntled investors who, based on "positive statements" from the Swedish vendor, bought Ericsson stock between September 11, 2007, the date of the vendor's Strategy and Technology Summit in London, and October 15, the day before Ericsson's profits warning. (See Svanberg Boasts HSPA.)
Ericsson's stock fell 27 percent on October 16 following the news that its third quarter wasn't quite shaping up as expected.
A press release from Coughlin Stoia states: "The complaint alleges that Defendants [Ericsson and some of its executive officers] knew or recklessly disregarded that: (i) the Company was experiencing declining sales in its networks due to lower sales of expansions and upgrades of mobile networks; (ii) sales in Western Europe were declining due to operator consolidation in several markets; and (iii) as a result, Defendants lacked a reasonable basis for their positive statements about the Company’s business."
Coughlin Stoia says it will seek to "recover damages" on behalf of investors, who have 60 days to join the class action.
— Ray Le Maistre, Courtroom Editor, Light Reading