Apple has agreed to pay $490 million (Sh67,395,531 billion) to settle a class-action lawsuit alleging that Chief Executive Tim Cook defrauded shareholders.
Cook allegedly concealed details about the falling demand for iPhones in the Chinese market.
Fastcompany.com reported that six years after Cook made the allegedly misleading comments, Apple this week reached a $490 million settlement to put the matter to bed
“When you’re the CEO of a multibillion-dollar corporation, your words have weight. As Apple chief executive Tim Cook just found out, they can also have a price—$61 million per word, to be exact,” Fastcompany.com said.
According to Fastcompany.com, the lawsuit claimed Cook concealed falling demand for iPhones in China, and that the misrepresentations could have easily led investors to misjudge the value of the stock.
Fastcompany.com reported that the issue started on November 1, 2018, when Cook spoke to investors on an analyst call.
Cooke allegedly told investors that although the company was experiencing challenges in countries such as Brazil, India, Russia, and Turkey, where currencies had weakened, he would not put China in that category.
Fastcompany.com said that just a few days after the call, the company told its suppliers to limit production.
Then, unexpectedly, on January 2, 2019, Cook announced Apple would slash its quarterly revenue forecast by up to $9 billion, Fastcompany.com reported.
Cook allegedly blamed trade tensions between China and the United States for the lowered forecast.
Fastcompany.com reported that it was massively significant, given it was the company’s first time dropping predictions since the iPhone’s launch in 2007.
The next day, according to Fastcompany.com, shares fell by 10 per cent—a loss of $74 billion in market value.
Fastcompany.com reported that court papers showed Apple denied liability in the class-action lawsuit.
However, Apple settled to avoid incurring more costs as well as the distractions of a more lengthy lawsuit.
Fastcompany.com said that earlier this month, after-sales in China missed analysts’ targets, Cook told Reuters:
“We did feel good about the plus 6% (revenue growth) for iPhone. We had particularly strong double-digit growth on the iPhone in emerging markets outside of China. The iPhone is doing well in those markets.”
The CEO added, “China is the most competitive smartphone market in the world, and that hasn’t changed.”
