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- Apple agreed to pay $490 million to settle a 2019 shareholder class action lawsuit.
- The lawsuit alleges that CEO Tim Cook made false comments about sales in China during a 2018 earnings call.
- Apple denies wrongdoing and said it agreed to the settlement to prevent further litigation.
Comments made by Apple CEO Tim Cook years ago have only caused great damage to the company.
The tech giant has agreed to pay $490 million to settle a class action lawsuit filed against the company by shareholders in 2019, according to a proposed settlement filed in California court on Friday.
According to Reuters, the settlement will amount to about two days’ worth of profits for Apple, which will report a net profit of $97 billion in 2023. But that’s a costly outcome for Cook’s remarks.
In their initial complaint, investors accused Cook of making false comments about the company’s sales in China during a 2018 earnings call.
Cook told investors on a November 1, 2018 conference call that Apple was struggling in markets such as Brazil, India, Russia and Turkey.
But, he added, “I would not put China in that category.”
During the call, Cook also said, “Business in China was very strong last quarter. We grew 16% and we’re very happy with that. The iPhone in particular did very well in China. “We achieved very strong double-digit growth,” he said. report.
But just days later, Apple told its suppliers to slow down production, according to Reuters.
Then, in early 2019, Apple announced a significant downward revision to its revenue forecast for the first quarter of this year. Apple lowered its forecast for the quarter by 7.6% to $84 billion, instead of forecasting $89 billion to $93 billion.
And, in stark contrast to what Mr. Cook said a few months ago, the company blamed some of the decline on weak sales in China, where trade tensions with the United States were high.
Investors said in court documents that Cook’s false and misleading statements on the November call “caused Apple’s stock to trade at an artificially inflated price and that the true facts were not revealed.” “As a result, Apple’s stock price has fallen.”
In its complaint, Apple denies wrongdoing and says it agreed to the settlement “recognizing that further litigation would be protracted, unduly burdensome, expensive, and distracting.”
The settlement still requires approval from U.S. District Judge Yvonne Gonzalez Rogers.
Representatives for the plaintiffs and Apple did not immediately respond to BI’s requests for comment.
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