A few sentences from Apple boss Tim Cook could cost the iPhone company almost half a billion dollars. Apple wants to settle a class-action lawsuit that has been going on for years with a payment of 490 million dollars (450 million euros), according to court documents from the weekend. Cook expressed himself relatively positively about business in China in a conference call after quarterly figures were presented at the beginning of November 2018. Two months later, Apple lowered its sales forecast by up to $9 billion in an unusual move – and specifically referred to the slowdown in its China business. The share price fell and investors went to court.
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.
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.
On January 2, 2019, Apple announced that the company was expecting revenue of around $84 billion for the Christmas quarter that had just ended – instead of the previously forecast $89 to 93 billion. The group did not foresee the extent of the economic slowdown, especially in China, Cook wrote to investors. The forecast reduction is due to lower-than-expected iPhone sales, mainly in the Chinese market, it said.