Microsoft Hit with Class Action Suit for Allegedly Hiding Poor Surface RT Sales From Investors

Paul Lilly

It was only a matter of time, really

We suppose it was inevitable that a class action lawsuit of some sort would be filed against Microsoft over its handling of Surface RT. If you recall, Microsoft was never very forthcoming about its Surface RT sales figures, waiting until its Q4 2013 earnings report to reveal that Surface RT was essentially a flop, causing the company to take a $900 million charge on unsold inventory. The class action suit filed against Microsoft accuses the company of making misleading statements in regards to its financial performance and Surface RT in particular.

Microsoft still hasn't revealed exactly how many Surface RT tablets it sold, though the company did reveal in a 10-K filing that total Surface revenue was just $853 million , or $47 million less than the charge it took on Surface RT. That doesn't work out to a lot of tablet sales.

"Prior to the beginning of the Class Period, Defendants led the market to believe that Microsoft's launch of Surface RT had been executed in a measured and conservative fashion so that it could observe and understand its progress and outcome," the lawsuit states. "What Defendants knew, but failed to disclose to investors, however, was that Microsoft's foray into the tablet market was an unmitigated disaster, which left it with a large accumulation of excess, over-valued Surface RT inventory."

The lawsuit further states that Surface RT's original $500 price point made it "generally unsalable," further accusing Microsoft of "recklessly" ignoring the market value of its tablet.

What it all boils down to is a bunch of angry investors seeking to recover damages on behalf of all purchasers of Microsoft common stock, with an amount to be determined at trial.

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