A few sentences from Apple boss Tim Cook about the China business could cost the iPhone company almost half a billion dollars. Apple would like to use this amount to settle an investor class action lawsuit.
Apple has agreed to pay $490 million. This is intended to settle a class action lawsuit brought by shareholders over earlier statements by CEO Tim Cook regarding China business. The tentative agreement was filed Friday in federal court in Oakland, California.
The class action lawsuit was directed against the way in which the company provided information about the sales prospects of its iPhone models released in September 2018. Cook indicated at an investor meeting at the beginning of November that year that the then new devices would get off to a good start in the Far East.
What Cook had said
Cook had spoken in the conference call on November 1, 2018 about a slowdown in business in emerging markets such as Brazil, India, Russia and Turkey. At the same time, he said that he would “not put China in this category.” He then added: “Our business in China was very strong last quarter.”
Separately, Cook also said that Apple saw no evidence that customers were holding back on the more expensive new iPhone models XS and XS Max because they were waiting for the cheaper iPhone XR, which was released later. However, he restricted the fact that the company only had data for a rather short period of a few weeks.
Forecast significantly cut
On January 2, 2019, Apple announced that the company was expecting revenue of around $84 billion for the Christmas quarter that had just ended. Previously, 89 to 93 billion dollars had been promised. The group did not foresee the extent of the economic slowdown, especially in China, Cook wrote to investors. The forecast reduction was due to lower than expected iPhone sales, mainly in the Chinese market, it was said at the time. The share price then fell back.
According to the settlement agreement, Apple continues to not believe it violated any laws or misled investors. The company said it wanted to put the matter behind it, as continuing the legal dispute would be lengthy, time-consuming and expensive. The agreement still needs to be approved by the judge to become effective.