A u.S. federal judge says Apple must face suit after the giant fraudulently concealed a reduction in user demand for the iPhone, particularly in China, causing tens of billions of dollars in losses to shareholders,media reported.
U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that Apple shareholders could sue Chief Executive Tim Cook for boasting about strong demand for the iPhone on a November 1, 2018 analyst conference call. The incident comes just days after Apple asked its biggest manufacturer to cut production.
“Because there are no sudden effects of natural disasters or other human factors, it is impossible for Cook to be unaware that demand for the iPhone in the Chinese market is decreasing in the days leading up to the decision to cut production,” Rogers wrote. “
The judge in Oakland, California, also said Apple’s decision to stop reporting iPhone sales “seems reasonable to indicate that Apple expects sales of the iPhone to decline.”
Apple did not immediately respond to a request for comment Wednesday.
The lawsuit, which accuses Apple of concealing reduced demand for the iPhone, was launched by the City of Roseville EmployeeS’ Retirement System, a Michigan pension fund scheme. The immediate reason is that in a Letter to investors on January 2, 2019, Mr. Cook cut Apple’s revenue forecast to about $84 billion from $89 billion to $93 billion, a ceiling of $9 billion.
It was also the first time Apple had cut its revenue forecast since the release of the iPhone in 2007. The next day, Apple’s shares fell 10 percent, wiping $74 billion off its market value.
Cook said on an analyst conference call that the iPhone XS and XS Max had a “very good start” and that while some emerging markets were under pressure to reduce sales, “I wouldn’t put the Chinese market in that category”.
As of mid-November 2018, Apple had informed manufacturers Foxconn and Pagatron of plans to stop the new iPhone production line and a key supplier to significantly reduce shipments, the indictment said.
The case is Apple’s securities lawsuit, U.S. District Court for the Northern District of California, No. 19-02033.