William Gallagher
Shareholders who claim to have lost billions because Tim Cook failed to warn them of falling demand in China, have been told they can bring a class-action suit against Apple.
In 2019, Apple took the unusual step of revising its revenue guidance prediction down because of lower iPhone sales in China. However, a group of shareholders, led by the UK's Norfolk County Council, now say that this was too late. They argue that CEO Tim Cook should have foreseen the issue and said so during Apple's late 2018 financial earnings call.
During that November 2018 earnings call, Cook said that Apple was seeing what he described as sales pressure in some markets. However, he then stated that, "I would not put China in that category."
According to Reuters, US District Judge Yvonne Gonzalez Rogers now says that the shareholders' group, may bring a proposed class-action suit accusing Cook of concealing falling sales demand. Rogers said that Cook may not have known specifics, but it "strains credulity" that he would have been unaware of trade tensions and possible impact on sales.
According to Judge Rogers, the shareholders' argument presented a "cogent and compelling inference that Cook did not act innocently or with mere negligence."
Reuters reports that Apple has not responded to the ruling, but has previously said there is no proof that it defrauded the shareholders, or intended to.
The plaintiffs reportedly also filed unknown claims regarding sales of the iPhone XS, and iPhone XS Max. However, Judge Rogers dismissed both.
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
28 Comments
The markets are unpredictable.
Bet investors are not complaining when shares have been rising year after year.
The market is simply legalized gambling. There’s no guarantees so you win some, you lose some. Everyone knows that when they “invest” in the market.
If you look at the notes AppleInsider had for that November earnings call, China had double digit growth in iPhone sales for that quarter. How can Cook be "concealing" falling sales in that particular call if that's factual? Also, the "not in that category" reference by Cook appears to be related to countries that had currency devaluation versus the dollar and Apple makes the comment that they had to raise prices in some of those countries. India and Brazil were the only ones that were flat or down relative to sales.
Information like that can't be kept secret from shareholders. I'd raise a fit too if I had Apple shares and found out too late about China's decline in sales.