Apple has agreed to pay $490 million to settle a lawsuit over concealing a drop in iPhone demand in China
Apple has entered into a $490 million settlement to resolve a class action lawsuit alleging that CEO Tim Cook falsely informed investors about declining demand for iPhones in China, Reuters reports. The agreement was filed in the U.S. District Court in Oakland, California, and is pending approval by Judge Yvonne Gonzalez Rogers.
The lawsuit follows Apple’s unexpected announcement on January 2, 2019, that it would cut its quarterly profit forecast by $9 billion, which the company attributed to trade tensions between the US and China. In addition, Cook’s references in November 2018 to the stability of the market in China were called into question when it became known that Apple had asked suppliers to cut production.
The profit forecast downgrade was unprecedented for the company since the release of the iPhone in 2007, which led to a 10% drop in Apple shares the next day and a loss of $74 billion in market value.
Apple, which is headquartered in Cupertino, California, denies liability but decided to enter into a settlement to avoid the additional costs and attention of a trial. Sean Williams, a partner at Robbins Geller Rudman & Dowd, the law firm representing the shareholders, described the settlement as “an outstanding result.”
The agreement applies to investors who bought Apple shares between Cook’s comments and the downgrade of the profit forecast. It is important to note that since January 2019, Apple’s share price has more than quadrupled, and the company’s market value now exceeds $2.6 trillion.
