Apple will pay $490 million to shareholders in lawsuit

2024-03-15 19:48:02

Apple has agreed to pay $490 million to settle a class-action lawsuit alleging that CEO Tim Cook misled investors about a sharp decline in iPhone sales in China that culminated in a notable revision to revenue forecasts.

The preliminary settlement filed Friday in federal court in Oakland, California, stems from a shareholder lawsuit focused on how Apple conveyed information about the performance in China of iPhone models that went on sale in September 2018. China is one of the company’s largest markets.

Cook indicated the new iPhones were off to a good start during a conference call with investors in early November 2018, according to the lawsuit.

But a deep disappointment came on Jan. 2, when Cook warned that revenue for the quarter just ended would be $9 billion below management’s forecasts for that period. What’s more, virtually all of the sales decline was due to weak demand in China.

It was the first time Apple had lowered its revenue forecast since the iPhone appeared in 2007, and it sent its shares tumbling 10% the next day, a day of frenetic trading that wiped out more than $70 billion in Apple’s wealth. shareholders.

Apple strongly denied that Cook misled investors about iPhone sales in China between early November and early January. The Cupertino, California-based company maintained that position in court documents, but said it decided to make the payment after more than four years of legal wrangling to avoid an “overly burdensome, costly and distracting” disruption.

The agreement was reached through a mediator after federal judge Yvonne González Rogers rejected Apple’s request to dismiss the case, and set a trial date for September 9.

González Rogers has now been asked to approve the agreement at a hearing scheduled for April 30.

Thousands of shareholders who bought Apple shares in late 2018 could receive a portion of the funds, to be distributed from a pool that will be less than $490 million once lawyers in the case receive their fees. They aspire to receive 25%, about 122 million dollars, of the agreement.

The $490 million represents less than 1% of the $97 billion that Apple pocketed during the year that ended in September. Shareholders who held on to their shares have become richer. Apple’s stock price has more than quadrupled since Cook’s warning about China, raising shareholder wealth by an additional $2 trillion.

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