- Apple agreed to pay $490 million to settle a lawsuit alleging CEO Tim Cook misled investors about iPhone sales in China in late 2018.
- The lawsuit focused on Cook signaling strong iPhone sales in China in November 2018, before warning of weak demand and plunging revenue two months later.
- The settlement avoids further legal costs for Apple, with thousands of shareholders who bought stock in late 2018 eligible for a portion of the under $490 million settlement fund.
Apple has agreed to pay $490 million to settle a class-action lawsuit alleging CEO Tim Cook misled investors about iPhone sales in China.
Background of the Lawsuit
The preliminary settlement stems from a shareholder lawsuit focused on how Apple relayed information about iPhone models released in September 2018 performing in China, one of the company’s biggest markets.
Cook had signaled the new iPhones were off to a good start during an investor call in early November 2018.
The Letdown
That optimism dissolved into a huge letdown on Jan. 2, 2019, when Cook warned Apple’s revenue would fall $9 billion below forecasts, traced to weak iPhone demand in China.
It was the first revenue warning since the iPhone’s 2007 release and wiped out over $70 billion in shareholder wealth as the stock plunged 10%.
Apple’s Response
Apple denied Cook deceived investors about China iPhone sales between November and January.
But it agreed to the settlement to avoid further legal costs after the judge rejected dismissing the case.
Settlement Details
The settlement was reached through a mediator. Thousands who bought Apple stock in late 2018 may get a share of the under $490 million pool after legal fees.
It represents less than 1% of Apple’s $97 billion profit last fiscal year. Shareholders have since become wealthier as the stock price quadrupled.
