Apple has reached a $490 million settlement to address a class-action lawsuit accusing CEO Tim Cook of concealing decreasing iPhone demand in China, ultimately misleading shareholders. The agreement, filed in the U.S. District Court in Oakland, California, is pending approval from Judge Yvonne Gonzalez Rogers.
The lawsuit originated from Apple’s unexpected announcement on January 2, 2019, reducing its quarterly revenue forecast by up to $9 billion due to trade tensions between the U.S. and China. Investors scrutinized Cook’s previous reassurance on a November 1, 2018 analyst call that China was not experiencing similar sales pressure.
As a result, Apple directed suppliers to reduce production levels, leading to the first revenue forecast cut since the iPhone’s launch in 2007. This caused Apple’s shares to drop by 10%, wiping out $74 billion in market value the next day.
Despite denying any wrongdoing, Apple chose to settle to avoid extended legal costs and distractions. Shawn Williams from Robbins Geller Rudman & Dowd, representing the shareholders, praised the settlement as a positive resolution.
Judge Rogers’ decision not to dismiss the case in June highlighted the plausibility of Cook discussing sales projections rather than currency fluctuations and acknowledged Apple’s awareness of China’s slowing economy.
The lead plaintiff is the Norfolk County Council representing the Norfolk Pension Fund in Norwich, England. Lawyers for the shareholders may request fees up to 25% of the settlement amount.
The settlement covers investors who purchased Apple shares within two months after Cook’s comments and before the revenue projection adjustment. In terms of Apple’s $97 billion net income last fiscal year, this settlement equates to approximately two days of profit for the company.
Since January 2019, Apple’s stock price has soared over four times its initial value, pushing its market capitalization above $2.6 trillion. This demonstrates Apple’s resilience and growth in the telecommunications industry.
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