Late Tuesday, a U.S. federal judge said Apple must face part of a shareholder lawsuit claiming CEO Tim Cook’s comments touting strong iPhone demand fraudulently concealed falling demand for iPhones, especially in China, leading to tens of billions of dollars in shareholder losses.
U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that shareholders can sue over Chief Executive Tim Cook’s comments touting strong iPhone demand on a Nov. 1, 2018 analyst call, only a few days before Apple told its largest manufacturers to curb production.
“Absent some natural disaster or other intervening reason, it is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines,” Rogers wrote. The Oakland, California-based judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline.”
The complaint, led by the Employees’ Retirement System of the State of Rhode Island, came after Cook on Jan. 2, 2019 unexpectedly reduced Apple’s quarterly revenue forecast by up to $9 billion, in part because of U.S.-China trade tensions… Cook had said on the analyst call that the iPhone XS and XS Max had a “really great start,” and that while some emerging markets faced downward sales pressures “I would not put China in that category.”
MacDailyNews Take: This Apple shareholder lawsuit should fail because both Apple CEO Tim Cook and CFO Luca Maestri could have thought, back in November 2018, that China iPhone sales would continue and they might not have been able to foresee, even though it seems painfully obvious in hindsight, that a late rush of battery replacements would ensue in December 2018 just before the low-priced iPhone battery replacement program’s end date, negatively impacting sales of new iPhones.
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