Tag: class action

IBM sued for alleged securities fraud

IBM logoBig Blue has been sued by a shareholder who thinks the company committed securities fraud by failing to write down a money-losing semiconductor unit before agreeing to pay another company $1.5 billion to take that unit off its hands.

In October IBM’s said it would sell the unit to GlobalFoundries (GloFo) and take a related $4.7 billion pre-tax charge.

IBM also announced third-quarter results that day. Its share price fell nine percent over the next two trading days, wiping out more than $18 billion of market value.

According to the complaint, IBM inflated its stock price before selling the semiconductor unit by carrying the unit’s property, plant and equipment assets on its books at $2.4 billion, when it should have known the assets were worthless.

The shareholder moaned that potential bidders had been unwilling to pay much more than $1 billion for the entire unit, including intellectual property and personnel, suggesting that the hard assets had no or negative market value.

The shareholder in question is the City of Sterling Heights Police & Fire Retirement System in Michigan. It also named three IBM officials as defendants, including Chief Executive Virginia Rometty.

It seeks class-action status on behalf of shareholders.

“Defendants presented a misleading picture of IBM’s business and prospects,” the complaint said. “When the truth about the company was revealed to the market, the price of IBM common stock fell precipitously.”

Zombie class action haunts Apple

at-least-mantan-moreland-graces-this-poster-hollywood-horror-history-classic-horror-eras-the-1940-s-b840d71b-c348-43fd-ac1b-cf79e1070d44A ten-year old class action is back from the dead after haunting the fruity cargo cult Apple for more than a decade.

Apple faces an antitrust lawsuit which claims the outfit tried to monopolise online music distribution is headed to trial.

If you believe the Apple iPod iTunes antitrust litigation, Apple violated the US and California antitrust law by restricting music bought on iTunes from being played on devices other than iPods and by not allowing iPods to play music bought on other digital music services.

Another zombie  is going to be dug up for the trial — late Apple founder Steve Jobs will reportedly appear via a videotaped statement during the trial. Our guess is that he will not be able to answer questions, unless lawyers conduct a séance.

The trial will start this morning in the US District Court for the Northern District of California.

Plaintiffs are seeking about $350 million in the case and lawyers for both sides have filed dozens of trial documents over the past decade. The case has a long history. First, the court refused to dismiss it but chucked out some of the original claims in 2005.

In October, Judge Yvonne Gonzalez Rogers scheduled a trial to begin this Tuesday.

The original January 2005 complaint in the case references a music distribution industry that no longer exists nearly a decade later. The document refers to iTunes competitors Napster, Buy.com, Music Rebellion and Audio Lunch Box, along with digital music players from Gateway, Epson, RCA and e.Digital.

Even the opening paragraphs of the complaint talk about defunct CD seller Tower Records.

“It would be egregious and unlawful for a major retailer such as Tower Records, for example, to require that all music CDs purchased by consumers at Tower Records be played only with CD players purchased at Tower Records,” the complaint said. “Yet, this is precisely what Apple has done.”

Lawyers for plaintiff Thomas Slattery wrote that Apple has rigged the hardware and software in its iPod such that the device will not directly play any music files originating from online music stores other than Apple’s iTunes music store.

Apple removed DRM (digital rights management) from iTunes in early 2009, so the lawsuit covers iPods purchased from Apple between September 2006 and March 2009.