Apple settles lawsuit over misleading Tim Cook iPhone statement for $490 million
According to the AP, Apple has settled a class action lawsuit today for $490 million. The suit alleged that Apple CEO Tim Cook made a misleading statement about iPhone sales in China in 2018. Eventually, when the real situation involving iPhone sales in the country was revealed, the stock had a one-day decline of 10%. Cook's original comment during an investor conference call in November 2018 said that sales of the latest iPhone models, released that past September, were off to a good start in China.
But in reality, things were not as rosy as Cook had said and in January 2019 Apple revealed that revenue was going to come in $9 billion lower than expected for the just-completed fiscal quarter, and most of the shortfall was taking place in China. This marked the first time since the release of the iPhone in June 2007 that the tech giant had to lower its revenue guidance. And that did not sit well with Apple investors who sent the shares down 10% the day after Apple lowered its revenue forecast. That decline took $70 billion dollars away from Apple stockholders.
Apple settles lawsuit for $490 million that alleged CEO Tim Cook of misleading investors over iPhone demand in China
Apple originally denied that Cook had bamboozled investors with his comments but it was growing weary of fighting the allegations for more than four years. As a result, the company decided to settle the case. Additional pressure was placed on Apple to settle after U.S. District Judge Yvonne Gonzalez Rogers, who presided over the Epic v. Apple case, refused Apple's request to dismiss the case and set a trial date for September 9th.
Judge Gonzalez Rogers will now oversee a hearing on April 30 to discuss the settlement and she will be asked to sign off on it. As a Class Action suit, investors who purchased Apple stock in late 2018 could be in line to receive part of the $490 million settlement but not before the attorney's take up to $122 million, or about 25% of the settlement figure, off the top for their legal fees.
Since Cook's warning that led to the cratering of Apple's shares, the stock has more than quadrupled adding $2 trillion to investor's wallets.
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