Apple has settled a class-action lawsuit alleging that CEO Tim Cook misled investors about a significant drop in iPhone sales in China, resulting in unexpected revisions to the company’s revenue forecasts. The settlement involves a payment of $490 million in cash.
The preliminary settlement, filed in federal court in Oakland, Calif., means Apple will not disclose how iPhone models launched in September 2018 performed in China, a key market for the company. The lawsuit, brought by shareholders, focused on how this information was communicated.
During an investor conference call in early November 2018, Cook indicated that the new iPhones had a strong start, according to the complaint.
However, on January 2, 2019, Cook announced that Apple’s revenue for the quarter would be $9 billion lower than expected, with the majority of the decline attributed to weak demand in China.
Apple refuted allegations that Cook misled investors about iPhone sales in China and maintained its position in the settlement documents. Despite this, the company decided to settle after years of legal battles to avoid further complications.
The settlement agreement was facilitated by a mediator after a judge denied Apple’s motion to dismiss the lawsuit. The approval of the settlement is pending a hearing on April 30th.
Thousands of shareholders who acquired Apple stock in late 2018 may be eligible to receive a portion of the settlement, which will be less than $490 million after legal fees are deducted. Lawyers anticipate seeking up to a quarter of the settlement amount.
The $490 million payment represents less than 1% of Apple’s $97 billion profit in the last fiscal year. Shareholders have seen significant wealth growth as Apple’s stock price quadrupled since the China warning, generating an additional $2 trillion in shareholder value.
Source: www.theguardian.com
