US technology company Apple has agreed to pay $490 million (more than CZK 11 billion) to settle a class action lawsuit brought by shareholders. The lawsuit alleged that the company’s chief executive Tim Cook defrauded shareholders by concealing a decline in demand for iPhone smartphones in China. Reuters reported today. The agreement to settle the lawsuit has yet to be approved by the court.
The lawsuit
Behind the lawsuit is Apple’s surprise announcement in January 2019 that it would significantly lower its quarterly sales estimate due to trade tensions between the US and China. Cook, meanwhile, told investors in November 2018 that the company was feeling sales pressure in markets such as Brazil, India, Russia and Turkey, where domestic currencies had weakened, but that he “would not put China in that category”. A few days later, Apple told its suppliers to curtail production.
Apple’s share price plunged about ten percent the day after the news of the revenue estimate cut. The company’s market value fell by $74 billion (roughly CZK 1.7 trillion).
Agreement
Apple denies wrongdoing, according to court documents, but has agreed to settle the lawsuit out of court to avoid the costs and complications of a trial. Shareholder attorney Shawn Williams called the settlement agreement an “excellent result.”
Apple posted a net profit of $97 billion in the fiscal year that ended Sept. 30. The amount the company will pay to settle the lawsuit is equivalent to its profit in less than two days, Reuters pointed out.
Source: Czech Press Office
