Comments Apple’s CEO Tim Cook made years ago have just cost the company a boatload of money.
The tech giant agreed to pay out $490 million to settle a class-action lawsuit shareholders lodged against the company in 2019, according to a proposed settlement filed in California court on Friday.
The settlement amount comes out to about 2 days of profit for Apple, which reported $97 billion in net income for 2023, according to Reuters. But it’s a costly consequence for Cook’s statements.
In their initial complaint, the investors accused Cook of making false comments about the company’s sales in China during a 2018 earnings call.
In the call on November 1, 2018, Cook told investors that Apple was struggling in markets like Brazil, India, Russia, and Turkey.
But, he added, “I would not put China in that category.”
During that call, Cook also said, “Business in China was very strong last quarter. We grew 16%, which we’re very happy with. iPhone in particular was very strong, very strong double-digit growth there,” Business Insider previously reported.
But, just days later, Apple told its suppliers to slow production, according to Reuters.
Then, at the beginning of 2019, Apple announced it was dramatically cutting its revenue forecast for the first quarter of the year. Instead of the $89 billion to $93 billion Apple had predicted for the quarter, the company lowered its estimate by 7.6%, down to $84 billion.
And — in stark contrast to what Cook had said just months before — the company partly blamed the decrease on slumping sales in China, where trade tensions with the US were high.
The investors alleged in court documents that Cook’s false and misleading comments in the November call had “caused Apple’s stock to trade at artificially inflated prices, and that, when the true facts were disclosed, Apple’s stock price declined.”
In the filing, Apple denied wrongdoing, saying that it had agreed to the settlement “in recognition that further litigation will be protracted, overly burdensome, expensive, and distracting.”
The settlement still requires approval from US District Judge Yvonne Gonzalez Rogers.
Representatives for the plaintiffs and for Apple did not immediately respond to BI’s request for comment.
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