Lawsuit Accusing Apple of Hiding Weakening iPhone Demand Prior to Early 2019 Revenue Warning Allowed to Proceed

U.S. federal judge Yvonne Gonzalez Rogers this week ruled that a class action lawsuit accusing Apple of fraudulently concealing weakening demand for iPhones between August 2017 and January 2019 can proceed in part, as reported by Reuters.

iphone trade in store
In January 2019, Apple lowered its revenue guidance to $84 billion for the first quarter of its 2019 fiscal year, down from its original forecast of $89 billion to $93 billion. In a letter to shareholders, Apple CEO Tim Cook said that lower than anticipated iPhone revenue, primarily in Greater China, accounted for the entire revenue shortfall.

On an earnings call in November 2018, a few months earlier, Cook touted the "very successful launch of iPhone XS and iPhone XS Max" and also noted that iPhone demand in China was particularly strong during the fourth quarter of its 2018 fiscal year. Apple made no mention of potential iPhone or China weakness on the horizon.

In her order, however, judge Rogers wrote that "absent some natural disaster or other intervening reason, it is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines," likely referring to a Wall Street Journal report that claimed Apple slashed production orders for the iPhone XS, iPhone XS Max, and iPhone XR just days after its earnings call.

"It is also implausible that Cook was unaware of emerging market issues in China despite admitting two months later that the Company observed worrying signs throughout the quarter," added Rogers.

On its November 2018 earnings call, Apple also announced that it would no longer be disclosing iPhone, iPad, and Mac unit sales going forward. Rogers said this decision "plausibly suggests that defendants expected unit sales to decline."

Apple's stock price dropped up to 10 percent in the hours after it lowered its revenue guidance, resulting in losses for shareholders. The complaint is led by the Employees' Retirement System of the State of Rhode Island.

Tags: lawsuit, AAPL

Top Rated Comments

appleguy123 Avatar
26 weeks ago


If you can’t handle the risk, don’t own the stock. I don’t think you can sue your way out of a failed trade, can you?

These clowns should be forced to pay for Apple’s legal fees.

When you purchase a share of a company, you are purchasing a product. There is always risk in the stock market, but it is the CEO’s job to accurately describe the current state of the company to its shareholders (owners) so that these purchases can be made in an informed way. If it’s proven in court that he hid material information from shareholders for longer than he needed to, appropriate action should be taken.
Score: 27 Votes (Like | Disagree)
julesme Avatar
26 weeks ago
If you can’t handle the risk, don’t own the stock. I don’t think you can sue your way out of a failed trade, can you?

These clowns should be forced to pay for Apple’s legal fees.
Score: 19 Votes (Like | Disagree)
Rogifan Avatar
26 weeks ago
More worthless uses for our court systems.
Score: 16 Votes (Like | Disagree)
Northern Man Avatar
26 weeks ago
Back to court Tim. May be easier to be more transparent and ethical in future remarks...
Score: 8 Votes (Like | Disagree)
tranceking26 Avatar
26 weeks ago
Another week, another lawsuit
Score: 8 Votes (Like | Disagree)
konqerror Avatar
26 weeks ago


If you can’t handle the risk, don’t own the stock. I don’t think you can sue your way out of a failed trade, can you?

If you don't want to be honest and transparent to the public, then don't sell stock to the public.

By being a member of a stock marketplace with strict disclosure rules, ordinary people can buy stock without having to hire a fleet of lawyers and auditors. Apple benefits by being able to pay employees and acquire companies with stock. Tim Cook, like ordinary shareholders, benefits by being able to sell his stock awards easily in a liquid fashion.

This is something any stock owner should know and has been highly relevant recently: look at the Luckin Coffee scandal. Similarly, Dell didn't want the pressures of public scrutiny, so the company was taken private for several years.
Score: 8 Votes (Like | Disagree)

Top Stories

maxresdefault

Italy Fines Apple $12 Million for Misleading iPhone Water Resistance Claims

Monday November 30, 2020 3:10 am PST by
Apple has been slapped with a 10 million euro ($12 million) fine by Italy's antitrust watchdog for unfair commercial practices related to its iPhone marketing in the country. One of the Apple ads cited in the Italian watchdog's proceedings (credit: setteBIT) Specifically, Apple is being charged for misleading claims in promotional messages about how deep and how long iPhones can be submerged...
General cyber monday 20 sale feature

Apple Cyber Monday 2020: Discounts on iPads, Macs, AirPods, and More [Updated]

Monday November 30, 2020 6:25 am PST by
Today is Cyber Monday, a shopping event that sees many of the same deals from Black Friday bleed over into a new week, along with a few brand new offers on everything from Apple products to related accessories. In this post we'll highlight the best online discounts that you can find on Apple devices today. Note: MacRumors is an affiliate partner with some of these vendors. When you click a...
iPhone black friday 20 sale feature

Apple Black Friday 2020: Best iPhone Deals

Friday November 27, 2020 12:56 pm PST by
Black Friday is halfway done, but there are still a few deals to shop for on iPhones at carriers like AT&T, Verizon, and T-Mobile/Sprint. Note: MacRumors is an affiliate partner with some of these vendors. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running. AT&T Starting with AT&T, you'll find up to $700 off any iPhone 12 when...
windows 10

Developer Successfully Virtualizes Windows for Arm on M1 Mac

Friday November 27, 2020 7:16 am PST by
Developer Alexander Graf has successfully virtualized the Arm version of Windows on an M1 Mac, proving that the M1 chip is capable of running Microsoft's operating system (via The 8-Bit). Currently, Macs with the M1 chip do not support Windows and there is no Boot Camp feature as there is on Intel Macs, but support for Windows is a feature that many users would like to see. Using the...
Top Stories 38 Feature

Top Stories: Black Friday Deals, Redesigned MacBooks, Hands-On With Apple's M1 Macs

Saturday November 28, 2020 6:00 am PST by
With Apple's holiday hardware lineup seemingly all set, attention this week turned to the shopping end of things with Apple and other retailers rolling out their Black Friday deals. That wasn't the only news this week, however, as we've continued to learn more about Apple's new M1-based Macs and we've even heard some fresh rumors about redesigned Mac notebooks coming next year, so read on...
16 inch MBP Mini Led

Mini-LED M1 MacBook Pro and Mini-LED iPad Pro Models Coming First Half of 2021

Monday November 30, 2020 2:24 am PST by
Apple is widely reported to be embracing mini-LED display backlighting technology for some products next year, and a new report today by DigiTimes has named several of Apple's partners in the supply chain that are expected to benefit from the switch. According to the report, Apple is set to launch its first mini-LED iPad Pro in the first quarter of 2021 and mass produce mini-LED MacBook Pro...
iphone trade in store

UK Environmental Committee Says Apple Contributing to 'Throwaway Culture' of 'Short-Lived Products'

Thursday November 26, 2020 7:07 am PST by
Technology companies like Apple are contributing to e-waste by making their products difficult to repair, and charging expensive repair fees, according to a lengthy report published today by the UK Parliament's Environmental Audit Committee. "We were told that Apple glues and solders parts together on their laptops, which makes repairing them very difficult," the Committee wrote in a summary ...
mac mini macbook pro macbook air

Apple M1 Hands-On Comparison: MacBook Air vs. MacBook Pro vs. Mac Mini

Monday November 23, 2020 3:40 pm PST by
Apple's M1 Macs are out in the wild now, but ahead of the holidays, you might still be trying to figure out which one to pick up, either for yourself or as a gift for someone else. We've got all three of the new Macs available, so we thought we'd give MacRumors readers a hands-on overview of each machine in our latest YouTube video. Subscribe to the MacRumors YouTube channel for more videos. ...
iphone 12 colors

iPhone 12 Colors: Deciding on The Right Color

Thursday November 5, 2020 8:35 am PST by
The iPhone 12 and iPhone 12 Pro arrived last month in a range of color options, with entirely new hues available on both devices, as well as some popular classics. The 12 and 12 Pro have different color choices, so if you have your heart set on a particular shade, you might not be able to get your preferred model in that color. iPhone 12 mini and iPhone 12 The iPhone 12 mini and iPhone 12 are ...
ipadairdesign

2020 iPad Air vs. iPad Pro: Hands-On Comparison

Tuesday October 27, 2020 3:03 pm PDT by
Apple announced the new 2020 fourth-generation iPad Air in September, but the new tablets just started shipping out to customers last Friday. We picked one up and thought we'd do a hands-on comparison with the iPad Pro, which was last updated in March, because both tablets are about as powerful and share many similarities. Subscribe to the MacRumors YouTube channel for more videos. Design and ...