Apple Settles $490 Million Lawsuit Over iPhone Demand Disclosure

Apple has reached a $490 million settlement to resolve a class-action lawsuit that accused Chief Executive Tim Cook of concealing declining demand for iPhones in China. 

The settlement stems from Apple’s unexpected announcement 2019 of a significant revenue forecast cut attributed to U.S.-China trade tensions.

Background and Lawsuit Details:

The lawsuit, filed with the U.S. District Court in Oakland, California, alleged that Tim Cook misled shareholders by downplaying challenges in China during an analyst call in November 2018. 

Subsequently, Apple announced a substantial cut to its revenue forecast, leading to a significant decline in its stock value. Despite denying liability, Apple opted to settle to avoid prolonged litigation.

Implications and Shareholder Reaction:

The $490 million settlement represents a substantial sum for shareholders affected by the alleged misrepresentation. 

While Apple’s net income remains robust, the payout recognizes the impact on shareholders and aims to mitigate further legal and financial risks.

Legal Proceedings and Court Findings:

U.S. District Judge Yvonne Gonzalez Rogers refused to dismiss the lawsuit, finding merit in the plaintiffs’ claims that Tim Cook‘s statements could have misled investors about Apple’s sales outlook. 

The lead plaintiff, the Norfolk County Council, pursued the case for shareholders who bought Apple shares between the disputed statements and the subsequent revenue forecast adjustment.