An English council, which runs the multi-billion pound Norfolk Pension Fund, is suing Apple for allegedly concealing weak iPhone demand and has now won a legal breakthrough after a judge certified the case’s class action status.
The council is suing Apple, chief executive Tim Cook and chief financial officer Luca Maestri, claiming the company’s chief executive misled shareholders over weak iPhone demand in China in 2018.
Mr Cook told shareholders in November 2018 that while the company was “seeing pressure” in some emerging markets, “I would not put China in that category”.
The news was met with relief by shareholders, since China is a major market for the company.
However, in January 2019 – two months later – Apple unveiled a major profit warning that blamed weakness in China. It was the first time Apple had cut sales forecasts since 2002 and sent shares down by 8pc.
Judge Yvonne Gonzalez-Rogers said that Apple had failed to dismiss the council’s efforts to turn the case into a class action, and labelled the company’s arguments as “distortions”.
Any trial would be likely to see Mr Cook take the stand.
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.
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