Apple Settles Lawsuit Over China iPhone Sales

Apple has finally agreed to pay $490 million to resolve the claims about how CEO Tim Cook misled investors about a decline in iPhone sales in China. The class-action lawsuit, filed in Oakland, California, alleged that Apple failed to accurately report the performance of iPhone models released in September 2018.

During an investor conference call in early November 2018, Cook indicated positive sales figures for the new iPhones. However, on Jan. 2, 2019, Apple issued a warning that its revenue for the quarter would fall significantly below expectations, primarily due to weak demand in China. This announcement marked the first time Apple had revised its revenue guidance since the launch of the iPhone in 2007, resulting in a 10% drop in stock price and a loss of over $70 billion in shareholder wealth.

Despite denying allegations of deception, Apple decided to settle the lawsuit after more than four years of legal proceedings to avoid further complications. The settlement, reached through mediation, awaits approval from U.S. District Judge Yvonne Gonzalez Rogers, with a hearing scheduled for April 30.

Under the terms of the settlement, thousands of shareholders who purchased Apple stock in late 2018 may be eligible for compensation. However, the final payout, likely less than $490 million after legal fees, will come from a pool of funds. The attorneys involved in the case are expected to seek up to one-fourth of the settlement amount (around $122 million).

Although $490 million represents less than 1% of Apple’s $97 billion profit in its last fiscal year, shareholders have still seen significant gains. Since the China warning, Apple’s stock price has more than quadrupled, adding approximately $2 trillion in shareholder wealth. This settlement serves as a reminder of the importance of accurate financial reporting in maintaining investor trust and market stability.