2018 Statement "China iPhone Demand Remains Strong"
Quarterly Revenue Reduced 2 Months Later... Shareholders File Lawsuit
Apple has agreed to pay $490 million (approximately 652.7 billion KRW) to investors who filed a lawsuit claiming damages over CEO Tim Cook's statement that "iPhone sales in China are not declining."
On the 15th (local time), major foreign media reported that Apple reached a settlement with shareholders, including the Norfolk County Pension Fund in the UK, according to a settlement approval request submitted to the U.S. Northern District Court of California.
In a conference call following the earnings announcement in November 2018, CEO Cook stated that sales were under pressure due to exchange rates in countries such as Brazil, India, Russia, and T?rkiye. However, he added that "China is not in that category and is off to a good start," implying that iPhone demand in China was not decreasing.
However, on January 2 of the following year, CEO Cook announced a reduction in quarterly revenue guidance to $9 billion less than expected, citing the U.S.-China trade conflict. This was the first time Apple had lowered its quarterly revenue forecast since the iPhone launch in 2007.
As a result, Apple's stock price plummeted 10% the next day, causing a market capitalization loss of $70 billion.
Ultimately, investors including the Norfolk Pension Fund filed a class-action lawsuit that year, alleging that "CEO Cook deceived investors by knowing that iPhone demand in China was declining."
Apple did not admit to the claim that CEO Cook deceived investors. However, when the Oakland District Court of California scheduled the trial to begin in September, Apple agreed to the settlement citing excessive burden, costs, and the need to focus on business operations. If the court approves the settlement, the trial will be concluded.
Under this settlement, thousands of investors who purchased Apple shares at the end of 2018 are expected to receive $122 million, excluding attorney fees, from the total compensation amount of $490 million. The eligible shareholders are those who bought Apple stock between CEO Cook's statement and the announcement of the revised quarterly revenue forecast.
The shareholder side described the settlement as an "incredible outcome."
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