Apple has agreed to pay $490 million to end a class-action lawsuit accusing its CEO of misleading investors with a false assurance about demand for iPhones in China. The suit was sparked by Apple's unexpected announcement on Jan. 2, 2019, that the company planned to cut its quarterly revenue forecast by as much as $9 billion. Apple blamed the decision on trade tension between the US and China, Reuters reports. Two months earlier, Tim Cook had told investors in an analysts call that iPhone sales faced challenges in places such as Turkey, India, Brazil, and Russia. "I would not put China in that category," he said on the call. "Our business in China was very strong last quarter."
The January announcement, of the first revenue prediction cut in more than 15 years, per the Wall Street Journal, then came as a shock. Apple shares dropped 10%, erasing almost $75 billion in market value. Court records show the company denies liability in the settlement, which was filed Friday in federal court in Oakland and needs the approval of Judge Yvonne Gonzalez Rogers. That hearing is scheduled for April 30, per the AP. The settlement covers investors who bought shares during the two months between Cook's reassurance and the revenue forecast announcement.
A few days after the call with Cook, Apple told suppliers to reduce iPhone production. The company did not immediately comment on the outcome of the suit. Shawn Williams, a lawyer for shareholders, called it an "outstanding result." Based on Apple's $97 billion net income reported for its most recent fiscal year, the $490 million amounts to less than two days' worth of the company's annual profit, per the Journal. (More Apple stories.)
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