Apple has been ordered to face a proposed class-action shareholder lawsuit which accuses CEO Tim Cook of concealing falling demand for iPhones in China, which resulted in billions of dollars of claimed investor losses.
In a decision on Wednesday, U.S. District Judge Yvonne Gonzalez Rogers said shareholders led by a UK pension fund can sue over Cook’s comment on a Nov. 1, 2018, analyst call that while Apple was facing sales pressure in some emerging markets, “I would not put China in that category.”
Apple told suppliers to curb production a few days after Cook spoke, and on Jan. 2, 2019, unexpectedly cut its quarterly revenue forecast by up to $9 billion, which Cook blamed in part on pressure on China’s economy from U.S.-China trade tensions.
The lowered revenue forecast was the first by Cupertino, California-based Apple since the iPhone’s launch in 2007. Shares of Apple fell 10% the next day, erasing $74 billion of market value.
MacDailyNews Take: This Apple shareholder lawsuit should fail as there’s no proof Cook or CFO Luca Maestri defrauded or intended to defraud.
Both Cook and Luca could have thought, at the time of their statements, 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 just before the low-priced iPhone battery replacement program’s end date, negatively impacting sales of new iPhones.