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.
I had always thought when people invest in stocks there was a disclaimer that said an investor could lose money as there is always some risk involved. Sometimes you win and sometimes you lose. I surely didn’t think you could sue a company if you lost money. I haven’t lost any money on Apple so I definitely won’t be part of that lawsuit. I play a long game of buy and hold and that’s it. I’ve been doing that since 2004 and I’m way ahead.
You have not the slightest clue about investing. Companies are required to disclose accurate information. Cook said that the China business was doing well, and then almost immediately, it was poorly performing. The stock tanked and anyone who believed that Cook was telling the truth was quickly underwater.
That’s brazen dishonesty from Apple and they will likely be found guilty. I’m a long term shareholder of Apple and not personally suffering losses from this but I fully support those suing Apple.
Come on Tiim Apple…you cannot complain about dishonesty from Apple when your own post in inaccurate.
According to the quote, Tim did not say that the “…China business was doing well” as you asserted. He said that he would not include China in the group with emerging markets facing sales pressures.
Quote:
…while Apple was facing sales pressure in some emerging markets, “I would not put China in that category.”
Note that I am not saying that the lawsuit is invalid. I don’t know all of the facts and I don’t claim to be qualified to make such a judgment. I will defer to the courts.
I also agree that corporations and corporate officers are legally obligated to provide accurate information. We must enforce that rule and all of the other ethics rules in order to maintain fair and open investment markets.
Most rich people don’t actually do much working, so they just spend their lives suing those who do.
Gamblers whining and litigating after a loss at a gambling table or, in this case, a stockroom floor or in their database. What snowflakes. Geez.