As part of a $490 million settlement, Apple was hit with a class-action lawsuit that claimed CEO Tim Cook lied to shareholders about the decline in iPhone sales in China. U.S. District Judge Yvonne Gonzalez Rogers must approve a preliminary settlement that was submitted on Friday with the Oakland, California, US District Court.
It started when Apple shocked investors on January 2, 2019, by announcing that it would cut its quarterly revenue projection by as much as $9 billion, citing trade tensions between the US and China as the reason.
Even though Apple was seeing sales impact in countries like Russia, Turkey, Brazil, and India due to weak currencies, Cook assured investors on an analyst call on November 1, 2018, that "I would not put China in that category."
Apple instructed its suppliers to reduce output a few days afterwards. For the first time since the iPhone's 2007 debut, Apple has reduced its revenue projection. The following day, Apple's stock dropped 10%, erasing $74 billion in market value.
When asked for comment on the verdict, Apple and its attorneys did not immediately provide a response. The Cupertino, California-based corporation, according to court documents, denied responsibility but settled to save money and avoid the hassle of going to court.
Shareholder representative Shawn Williams of Robbins Geller Rudman & Dowd praised the settlement as a "outstanding result" for the class. Any Apple stockholder who purchased shares during the two months elapsing between Cook's remarks and the revenue prediction will be compensated.
With a dividend of just under two days' earnings, Apple's most recent fiscal year brought in $97 billion in net income. Rogers declined to dismiss the case last June. According to her, Apple was aware of China's slowing economy and the potential decline in demand, thus it was reasonable to assume that Cook was talking about Apple's sales outlook rather than currency shifts.
Located in Norwich, England, the Norfolk County Council serves as the Administering Authority of the Norfolk Pension Fund and is the principal plaintiff in this case. Shareholders' attorneys might chase a fee as high as 25% of the total settlement. Since January 2019, Apple's share price has more than doubled, resulting in a market value of over $2.6 trillion for the business.
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