Apple CEO Tim Cook’s comment made the company pay a large amount a few years ago.
The US tech giant agreed to pay $490 million to settle a class-action lawsuit filed by shareholders against the company in 2019, according to a filing submitted to a California court on March 15.
According to Reuters, this amount is equivalent to about two days of Apple’s profit – based on Apple’s net income report of $97 billion for 2023.
In the initial complaint, investors accused Tim Cook of providing misleading comments about the company’s sales figures during a financial report announcement in 2018.
During a conference call on November 1, 2018, Cook told investors that Apple was facing difficulties in markets such as Brazil, India, Russia, and Turkey. He then added, “I don’t put China in that category.”
“Business in China was very strong in the previous quarter. We grew 16%, which we’re very happy with. In particular, the iPhone had very good sales, with double-digit growth,” he added. However, just a few days later, Apple asked its suppliers to reduce production speed, according to Reuters.
In early 2019, Apple announced a significant cut in revenue forecasts for the first quarter of 2019. Instead of the previously predicted $89-93 billion, the company lowered its estimate by 7.6% to $84 billion.
In contrast to what Tim Cook said a few months earlier, Apple attributed part of the blame to declining sales in China – a place of escalating trade tensions with the US.
In documents filed with the court, investors alleged that Cook’s misleading and deceptive comments during the November meeting “artificially inflated Apple’s stock price, and when the truth was revealed, Apple’s stock price declined.”
Although it agreed to pay compensation, Apple denied any wrongdoing, emphasizing that the company agreed to settle “to avoid protracted, costly, and distracting litigation.”
