Apple agrees to pay $490 million in lawsuit over alleged withholding of Tim Cook information from shareholders

According to a court filing cited by Reuters Apple has agreed to pay $490 million to settle the class action lawsuit It alleges that Apple CEO Tim Cook withheld information from shareholders by failing to acknowledge declining demand for iPhones in China.

In the November 1, 2018 financial results conference call with analysts said Cook said Apple is under pressure in emerging markets where local currencies weakened, such as in Turkey, India, Brazil and Russia, However, China was not included in the list.

 

Regarding China, Cook said the following:

As for China specifically, I would not include China in this category. Our business in China was very strong last quarter. We grew by 16%, which we are very happy with. The iPhone in particular recorded very strong growth, very strong double-digit growth there. Our other product category was also stronger, even slightly stronger than the company’s overall performance.

A few months later, in January 2019, Cook shared a letter to investors in which he stated that Apple’s fourth quarter 2018 revenue would be approximately $84 billion, down from the original forecast of $89 billion to $93 billion. dollars for the quarter. On January 29, 2019, Apple reported revenue of $84.3 billion for the quarter.

Apple’s stock price fell approximately 25% between November 1, 2018 and January 31, 2019.

 

In his letter Cook said the slowing economy in the Greater China region was largely responsible for Apple’s revenue decline in the quarter:

Although we anticipated some challenges in key emerging markets, we could not have predicted the extent of the economic downturn, particularly in Greater China. In fact, the majority of our sales decline relative to our forecasts and more than 100 percent of our global year-over-year revenue decline are attributable to iPhone, Mac and iPad in Greater China.

The letter goes on to say that the entire sales decline was due to lower than expected iPhone sales, primarily in Greater China:

Lower-than-expected iPhone sales, primarily in Greater China, account for our overall revenue decline compared to our forecast and are far greater than our overall year-over-year revenue decline.

Investors claimed that at the time of the conference in November 2018, Cook knew that demand for iPhones in China was declining, but did not disclose this. Apple has denied these allegations and has not admitted any wrongdoing. According to the fileApple only agreed to the proposed settlement to avoid additional costs and time spent on litigation.

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