Apple paying $490M to settle lawsuit over Tim Cook’s China sales comments

Apple has agreed to pay $490 million to settle a class-action lawsuit alleging that CEO Tim Cook defrauded shareholders by concealing a decline in iPhone demand in China.

The preliminary settlement was filed Friday in U.S. District Court in Oakland, California, and must be approved by U.S. District Judge Yvonne Gonzalez Rogers.

This stemmed from Apple’s unexpected announcement on January 2, 2019, that the iPhone maker would be cutting its quarterly revenue forecast by up to $9 billion due to US-China trade tensions.

Cook told investors on a conference call with analysts on Nov. 1, 2018, that Apple faces sales pressure in markets with weak currencies such as Brazil, India, Russia and Turkey, but that “China is a big deal.” “I don’t want to put it in a category,” he said.

A few days later, Apple told its suppliers to curb production.

It was Apple’s first downward revision to its revenue forecast since the iPhone was launched in 2007, and the next day Apple’s stock price fell 10%, wiping out $74 billion in market capitalization.

Apple and its lawyers did not immediately respond to requests for comment on the ruling.

The Cupertino, Calif.-based company denied liability but settled the case to avoid the expense and confusion of litigation, court documents show.

Sean Williams, shareholder representation partner at Robbins Geller Rudman & Dowd, said the settlement was an “outstanding result” for shareholders.

The settlement targets investors who bought Apple stock in the two months between Cook’s comments and the company’s sales forecast.

Apple reported net income of $97 billion in its most recent fiscal year, and its dividends account for just under two days of profit.

Last June, Mr. Rogers refused to dismiss the lawsuit.

He said it was reasonable to believe that Cook was discussing Apple’s revenue outlook, not currency fluctuations, and that Apple knew China’s economy was slowing and demand could fall. .

The lead plaintiff is Norfolk County Council, the governing authority for the Norfolk Pension Fund in Norwich, England.

Attorneys for shareholders may charge fees of up to 25% of the settlement amount.

Apple’s stock price has more than quadrupled since January 2019, giving the company a market value of more than $2.6 trillion.

The case is Apple Inc. Securities Litigation, U.S. District Court for the Northern District of California, No. 19-02033.