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Ericsson, Over Its Head in Lawsuits

4 and still counting

By Elena Balan, Communications News Editor

22nd of November 2007, 13:42 GMT

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The list of class action suits for Ericsson started at the beginning of this month and now problems have been piling up for the company. The Swedish telecoms equipment maker now has to face four lawsuits filed against it.

All the four lawsuits

come from US companies that disapproved with the telecom giant's actions. The problem seems to be related to the fact that Ericsson delayed announcing last month's profit warning. The law firms now put on a great amount of pressure and it should be pretty interesting to see what are their demands from the telecom company, based on the prejudice their delay brought to others.

The first suit came at the beginning of the month, alleging that Ericsson misled investors in the period after its New York investor conference on September 11th. The telecom service provider claimed at that time that they followed the rules stated by the stock exchange as well as those listed in their own stock exchange contract.

Ericsson's shares fell 25 points on the day when the profit warning was issued. Moreover, they dropped a further 19 points in the last two days following another investor conference in New York. the company has had a major drop of 44 points since the 16th of October, which means that the shares' value suffered a major drop.

It seems natural that companies hand out such issues to their investors, but Ericsson has done no such thing. As a result, the company is now deep in trouble, aside the major profit losses that it suffered in time. The company's market cap have gone down to 222 billion at this moment. Sounds like much, but it turns out to be very little, especially when comparing to the total of 446 billion, where it was listed at the beginning of year 2007.

TAGS:

Ericsson | Lawsuit | shares | profit warning | delay

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