After Cook’s statements on China: Apple pays $490 million in class action lawsuit

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A few sentences from Apple CEO Tim Cook could cost the iPhone company almost half a billion dollars. Apple will settle a years-long class action lawsuit by paying $490 million, according to court documents released this weekend.

Cook made relatively positive comments about business in China during a conference call after the quarterly figures were presented in early November 2018. Two months later, Apple took an unusual step and lowered its revenue forecast by as much as $9 billion, explicitly citing the slowdown in its Chinese operations. The share price fell and investors went to court.

According to the settlement agreement, Apple still does not believe it broke any laws or misled investors. However, the company wanted to put the matter behind it as continuing the legal dispute would be lengthy, time-consuming and expensive, it said. The agreement must still be approved by the court to enter into force.

The China Commentary

Cook had spoken in the conference call on November 1, 2018 about a slowdown in trading in emerging markets such as Brazil, India, Russia and Turkey. At the same time, he said he “would not put China in this category.” He then added: “Our China business was very strong last quarter.”

Separately, Cook also said Apple saw no evidence that customers were holding back on the more expensive new iPhone XS and XS Max models because they were waiting for the cheaper iPhone XR, which came out later. However, he limited himself to the fact that the company only had data for a relatively short period of a few weeks.

On January 2, 2019, Apple announced that the company expected revenue of approximately $84 billion for the Christmas quarter that had just ended – instead of the previously forecast $89 to $93 billion. The group did not foresee the extent of the economic slowdown, especially in China, Cook wrote to investors. The predicted decline is due to lower-than-expected iPhone sales, especially in the Chinese market, the report said. (SDA)

Source: Blick