Apple sensor supplier InvenSense is facing a class-action lawsuit filed by investors accusing the company of defrauding investors by not revealing the true terms of its deals with Apple and Samsung, reports Silicon Beat. InvenSense recently joined Apple's supply chain, producing gyroscopes and accelerometers for the iPhone 6 and 6 Plus.

In the lawsuit, investors accuse InvenSense CEO Alan Krock of providing misleading guidance when he discussed a large new customer during the company's earnings conference call in July 2014.

"Instead of revealing the true condition of the company and its prospects, defendants hid those facts from investors and chose to issue strong guidance and paint a picture of a bright future with a new mega-customer," the complaint states.

Investors believed the new customer to be Apple and increased their stock holdings based on this assumption. During this buying frenzy, InvenSense insiders reportedly sold off their shares, making more than $5.3 million at a time when the price of InvenSense's stock was climbing.

invensense-gyro
Investors were surprised when InvenSense's gross margins dropped 11 percentage points in the following quarter despite this supposed lucrative Apple contract, and the company's share price quickly fell 20 percent. Plaintiffs in the case assert this decline in the company's financial state was the result of overly generous supplier deals with Apple and Samsung, as well as manufacturing problems that delayed component shipments. The company's failure to disclose these "sweetheart deals" is the basis for the class-action lawsuit.

InvenSense isn't the first supplier to face financial troubles after inking a deal with Apple. Materials manufacturer GT Advanced last year filed for bankruptcy following a failed manufacturer agreement with Apple to supply sapphire for future Apple devices.

Tag: lawsuit

Top Rated Comments

Analog Kid Avatar
82 months ago
Ah, investor logic is such simple logic...

If I beat the market, I'm a genius that saw something no one else did!

If the market beats me, I must have been lied to: sue!!
Score: 5 Votes (Like | Disagree)
IJ Reilly Avatar
82 months ago
Due to Apple’s insistence on secrecy, InvenSense was not allowed to announce that its sensors would be included in the iPhone 6 and 6 Plus before the gadgets’ release. But plaintiffs claim that savvy investors read between the lines when former InvenSense Chief Financial Officer Alan Krock alluded to a new customer who would account for 10 percent of the company’s revenue during a July earnings call.
http://www.siliconbeat.com/2015/01/12/invensense-sued-by-investors-over-sweetheart-deal-with-apple/

So investors who tried to "read between the lines" are suing because they failed to guess right? Good luck with that one.

The comparison to GTAT seems inevitable, but off base. InvenSense is selling product to Apple. GTAT never did.
Score: 5 Votes (Like | Disagree)
IJ Reilly Avatar
82 months ago
I'm not market savvy so be gentle. Did they actually fail to guess right? They guessed the customer was Apple. It was Apple. CEO issued strong guidance based on that customer. Investors bought, insiders sold, margins dropped, stock dropped. I'm probably over simplifying. I still don't think this is worthy of a lawsuit. Stock market is a calculated risk.

Related but unrelated. Wouldn't a smart investor naturally assume if a company is in business with Apple: 1. The margins will be thin. 2. The company is betting on volume to counter the thin margins.

Again, not savvy enough to know what's what.

I think you are getting it right. The plaintiffs have to show that the company provided investors with deliberately misleading or inaccurate information. The insider trading claim is also difficult to prove without evidence that insiders traded outside of the trading plans they are required to file with the SEC. The problem with most insider trading claims is that this evidence is generally absent. Insiders are always trading so it's easy to make strictly circumstantial claims like these but they don't count for a hill of beans.
Score: 3 Votes (Like | Disagree)
nzalog Avatar
82 months ago
We're only 13 days into 2015 but I feel like this is the most bland story I have read this year, quite possibly ever, even the GTAT story was more riveting.

Worst comment of 2015?
Score: 3 Votes (Like | Disagree)
ArtOfWarfare Avatar
82 months ago
Is the margin dropping 11% really all that important, though? I feel like the profit is more important. Are they making more or less than last year?

----------

http://www.siliconbeat.com/2015/01/12/invensense-sued-by-investors-over-sweetheart-deal-with-apple/

This article also fails to mention what their profit was.

Also, their margin fell from 47% to 36%. This really doesn't sound like the sky falling to me. So long as they're selling at least 31% more product, they've increased their profit.
Score: 2 Votes (Like | Disagree)
saving107 Avatar
82 months ago
We're only 13 days into 2015 but I feel like this is the most bland story I have read this year, quite possibly ever, even the GTAT story was more riveting.
Score: 2 Votes (Like | Disagree)

Top Stories

siir apple event april 20

Siri Reveals Apple Event Planned for Tuesday, April 20

Tuesday April 13, 2021 12:04 am PDT by
Siri has apparently prematurely revealed that Apple plans to hold an event on Tuesday, April 20, where the company is expected to reveal brand new iPad Pro models and possibly its long-awaited AirTags trackers. Subscribe to the MacRumors YouTube channel for more videos. Upon being asked "When is the next Apple Event," Siri is currently responding with, "The special event is on Tuesday, April...
apple event spring loaded

Apple's 'Spring Loaded' Event Officially Announced for Tuesday, April 20

Tuesday April 13, 2021 9:04 am PDT by
Following an overnight leak by Siri, Apple today officially announced that it will be holding a special "Spring Loaded" event on Tuesday, April 20 at 10:00 a.m. Pacific Time at the Steve Jobs Theater on the Apple Park campus in Cupertino, California. As with all of Apple's 2020 events, the April 2021 event will be a digital-only gathering with no members of the media invited to attend in...
apple event hashflag

Twitter Hashflag for April 20 Apple Event Goes Live

Tuesday April 13, 2021 2:21 pm PDT by
Following the overnight Siri leak and subsequent announcement that Apple will hold a media event on Tuesday, April 20, a new Twitter hashflag has appeared to help provide visibility for the event on the platform. For the last several recent events, Apple has utilized hashflags, which are little icons next to hashtags on Twitter, as a way to market its events. The company first started the...
iphone12cameras

Kuo: 2022 iPhones to Feature 48-Megapixel Camera, 8K Video, and 6.1 and 6.7" Sizes With No 5.4" Mini Option

Tuesday April 13, 2021 10:45 pm PDT by
The upcoming 2022 iPhone lineup will feature two 6.1-inch devices and two 6.7-inch devices, with no mini-sized 5.4-inch iPhone, well-respected Apple analyst Ming-Chi Kuo said in a note to investors that was seen by MacRumors. Two of the iPhones will be high-end models and two of the iPhones will be lower-end models, similar to the current iPhone 12 lineup. Apple introduced the 5.4-inch...
macos catalina serial number

Apple Preparing Rollout of New Randomized Product Serial Numbers Ahead of 'Spring Loaded' Event

Wednesday April 14, 2021 2:08 am PDT by
Apple is advising its authorized premium resellers and dealers to prepare for new products with 10 and 12 digital serial numbers, days ahead of when it's expected to reveal a slew of new products. MacRumors previously reported that Apple plans to switch to randomized serial numbers for future products starting in early 2021. The company now seems to be preparing for that roll-out, telling...
duanrui iphone13 notch samples

More Leaked iPhone 13 Samples Show Smaller Notch, Repositioned Earpiece and Front Camera

Wednesday April 14, 2021 1:06 am PDT by
Leaker known as "DuanRui" has today shared an image of two iPhone 13 "film samples," which show the same rumored smaller notch design coming to the iPhone 13 series that we've seen from other sources. In past tweets, DuanRui has accurately leaked the correct names of the iPhone 12 models and an iPad Air 4 manual revealing its new design, so there's good reason to think this leak is credible, ...
Google maps feaure green

Google Maps App for iOS Finally Updated After Four Months

Monday April 12, 2021 10:03 am PDT by
Following the completed rollout of App Privacy labels for its App Store apps, Google today updated the Google Maps app for the first time in four months. Apple in December began requiring all new app submissions and app updates to include App Privacy labels, detailing the data that is collected by the app so consumers know what they're sharing. Google didn't begin implementing App Privacy ...
iPad Pro Mini LED

Mini-LED iPad Pro Expected at Apple Event on April 20 as Production Ramps Up

Tuesday April 13, 2021 9:53 am PDT by
Apple today announced that it will be hosting a virtual event on Tuesday, April 20 at 10 a.m. Pacific Time, and one of the new products expected to be unveiled at the event is a new iPad Pro with a Mini-LED display. In a brief snippet shared with paid subscribers, Taiwanese supply chain news website DigiTimes today reported that Apple supplier Ennostar has substantially improved its yield...
apple event particularly innovative article

Gurman: Apple's 'Spring Loaded' Event Won't Feature Anything 'Particularly Innovative'

Thursday April 15, 2021 1:30 am PDT by
Bloomberg's highly-respected Mark Gurman says that he expects nothing "particularly innovative" or "extraordinary" to launch at Apple's "Spring Loaded" event next week, Tuesday, April 20. Gurman made the remarks during an interview for Bloomberg Technology, in which he reaffirmed that Apple will launch a new 11-inch and 12.9-inch iPad Pro, with the higher-end model featuring a brand new...
spotify car thing 1

Spotify Announces the 'Car Thing' as its First Hardware Device

Tuesday April 13, 2021 7:03 am PDT by
Spotify has today announced its first hardware device, the "Car Thing," which is an in-car dash-mounted music and podcast player (via TechCrunch). Spotify is looking to provide a product for customers who want a "more seamless" and personalized in-car listening experience, especially in the large number of cars that do not support modern in-car infotainment systems. The Car Thing is aimed ...