Apple faces lawsuit alleging it concealed falling iphone demand in china

[spartaman64]

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A federal judge said Apple Inc must face part of a lawsuit claiming it fraudulently concealed falling demand for iPhones, especially in China, leading to tens of billions of dollars in shareholder losses.

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While dismissing most claims, U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that shareholders can sue over Chief Executive Tim Cook’s comments touting strong iPhone demand on a Nov. 1, 2018 analyst call, only a few days before Apple told its largest manufacturers to curb production.

“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,” Rogers wrote.

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The Oakland, California-based judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline.”

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The complaint, led by the Employees’ Retirement System of the State of Rhode Island, came after Cook on Jan. 2, 2019 unexpectedly reduced Apple’s quarterly revenue forecast by up to $9 billion, in part because of U.S.-China trade tensions.

It was the first time since the iPhone’s 2007 launch that the Cupertino, California-based company had cut its revenue forecast. Apple stock fell 10% the next day, erasing $74 billion of market value.

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Cook had said on the analyst call that the iPhone XS and XS Max had a “really great start,” and that while some emerging markets faced downward sales pressures “I would not put China in that category.”

By mid-November 2018, Apple had told the manufacturers Foxconn and Pagatron to halt plans for new iPhone production lines, and a key supplier had been told to materially reduce shipments, the complaint said.

source: https://www.reuters.com/article/us-apple-lawsuit/apple-must-face-u-s-shareholder-lawsuit-over-ceos-iphone-china-comments-idUSKBN23A2CN

 

It does seem that Tim Cook lied in his statement that china sales are fine and it seems unlikely that the CEO wouldn't know about a big drop in sales in a big market. I hope they get the proper punishment to dissuade them from doing it again in the future.

[Commodus]

This is pretty ho-hum, I'm afraid -- it's the usual attempt by shareholders to recoup losses though the courts regardless of  merit.  "I would not put China in that category" is a bit vague and not the same as saying that sales were just dandy.  The plaintiffs need to show that Cook knew on November 1st that there was a sales slump that would lead to a production cut in the middle of the month, and it's not clear right now that this is the case.

 

Don't get me wrong, if there's supporting evidence that Cook was knowingly mischaracterizing Apple's performance at the time, the company should be in trouble.  But I've seen more than a few of these lawsuits in the news, and they frequently don't go anywhere as they either don't have sufficient proof or were spurious to start with.

[billcxsby]

classic apple

[spartaman64]

2 hours ago, Commodus said:

This is pretty ho-hum, I'm afraid -- it's the usual attempt by shareholders to recoup losses though the courts regardless of  merit.  "I would not put China in that category" is a bit vague and not the same as saying that sales were just dandy.  The plaintiffs need to show that Cook knew on November 1st that there was a sales slump that would lead to a production cut in the middle of the month, and it's not clear right now that this is the case.

 

Don't get me wrong, if there's supporting evidence that Cook was knowingly mischaracterizing Apple's performance at the time, the company should be in trouble.  But I've seen more than a few of these lawsuits in the news, and they frequently don't go anywhere as they either don't have sufficient proof or were spurious to start with.

i mean saying other markets have downward sale pressures and then saying china isnt in that category is saying that china doesnt have downward sales pressures right. I dont see any other way to interpret that

[Guest]

When are shareholders going to get that comments like this, and on social media are advertising and not official statements. 
 

You also then have the excellent sales of the iPhone 11, so I don’t really see how this plays out. Real figures are needed for validity. 

[spartaman64]

Just now, RorzNZ said:

When are shareholders going to get that comments like this, and on social media are advertising and not official statements. 
 

You also then have the excellent sales of the iPhone 11, so I don’t really see how this plays out. Real figures are needed for validity. 

i mean an analyst call from the CEO is pretty much an official statement idk how you can get much more official than that. and if musk can get in trouble for taking tesla private comments on twitter this surely would get tim cook in trouble right

[Guest]

Just now, spartaman64 said:

i mean an analyst call from the CEO is pretty much an official statement

Doesn’t seem like Tim was using formal language. It’s always up to the shareholder to buy or sell.

[spartaman64]

Just now, RorzNZ said:

Doesn’t seem like Tim was using formal language. It’s always up to the shareholder to buy or sell.

idk if thats an excuse to give bad information. so if im a CEO and say we got a deal from fucking google to buy us out for 20000 dollars per share and then when people get scammed i say hey i wasnt being formal as you can see by when i said fucking and its always up to you whether to buy or sell i dont think it would hold up

[Commodus]

2 hours ago, spartaman64 said:

i mean saying other markets have downward sale pressures and then saying china isnt in that category is saying that china doesnt have downward sales pressures right. I dont see any other way to interpret that

All it really says is that there wasn't downward market pressure that he knew of.  It doesn't mean China was thriving, or that he knew exactly what direction China was headed.  It might indicate what you said, but it's not as explicit as, say, Elon Musk's tweets.

[Guest]

4 hours ago, spartaman64 said:

idk if thats an excuse to give bad information. so if im a CEO and say we got a deal from fucking google to buy us out for 20000 dollars per share and then when people get scammed i say hey i wasnt being formal as you can see by when i said fucking and its always up to you whether to buy or sell i dont think it would hold up

I would think shareholders have information from a variety of sources and, especially if it’s their job, would keep up to date. Like I said, Apple did have pretty nice iPhone 11 sales as reported, so I would ask for the figures to get the facts.

[Arika]

Ah, the NVidia accounting method

[mr moose]

3 minutes ago, Arika S said:

Ah, the NVidia accounting method

That was my first thought when I read the OP,  it has NVIDIA written all over it.  Just like NVIDIA I can see this going no where too.

[Commodus]

7 minutes ago, mr moose said:

That was my first thought when I read the OP,  it has NVIDIA written all over it.  Just like NVIDIA I can see this going no where too.

That's an important point.  Whatever you think of Cook's culpability, there's a good chance nothing will come of this.  The threshold for a legal claim that sticks is quite high, and generally for good reason (or else you'd see a flood of lawsuits like this).

[mr moose]

3 minutes ago, Commodus said:

That's an important point.  Whatever you think of Cook's culpability, there's a good chance nothing will come of this.  The threshold for a legal claim that sticks is quite high, and generally for good reason (or else you'd see a flood of lawsuits like this).

I just meant regardless of what happens,  in 3 months time no one will care (likely not even the investors) and life will go on.  Cook is absolutely at fault when he talks down or up  markets just like NVIDIA are. The judge has allowed it therefor it's enough to go to trial.

[Commodus]

8 minutes ago, mr moose said:

I just meant regardless of what happens,  in 3 months time no one will care (likely not even the investors) and life will go on.  Cook is absolutely at fault when he talks down or up  markets just like NVIDIA are. The judge has allowed it therefor it's enough to go to trial.

That's true too.  I'm just not convinced Cook was some mustache-twirling villain, or that there's necessarily enough to make this stick.  These lawsuits happen too often already, and they don't succeed all that often from what I've seen.

[mr moose]

2 minutes ago, Commodus said:

That's true too.  I'm just not convinced Cook was some mustache-twirling villain, or that there's necessarily enough to make this stick.  These lawsuits happen too often already, and they don't succeed all that often from what I've seen.

It doesn't make him a villain, it does not even imply he is a twisted business man or anything like that,  all it implies is he fell foul of the law when talking publicly about his companies outlook.

[Trik'Stari]

3 hours ago, Arika S said:

Ah, the NVidia accounting method

Well that explains how they count vram capacity. 

[Froody129]

6 hours ago, Commodus said:

That's true too.  I'm just not convinced Cook was some mustache-twirling villain, or that there's necessarily enough to make this stick.  These lawsuits happen too often already, and they don't succeed all that often from what I've seen.

I definitely agree frivolous lawsuits are commonplace, but you certainly don't have to be a conniving Bond villain to be held responsible for your actions. If you hit someone with your car because you weren't paying attention it doesn't mean you aren't to blame. 

 

If you make statements in an analyst call which influenced stock pricing you are responsible for those statements. Yeah people aren't perfect, but when you get paid as much as these CEOs that is what is expected of you. 

[Bombastinator]

People do love to rip on Apple here.  I’m not saying they’re wrong but I think prejudgment is not appropriate.

 

things to note:

1: this is about stuff that happened two years ago

2: the judge threw out every claim except this one, and didn’t say they were guilty, only that it wasn’t obvious garbage.  It doesn’t mean that there is necessarily an actual problem only that it alone out of the Miriad of claims isn’t obvious crap.

[HumdrumPenguin]

Apple lying? I'm shocked.

[Bombastinator]

11 minutes ago, HumdrumPenguin said:

Apple lying? I'm shocked.

It is a corporation.  They do that.

[Fnige]

On 6/7/2020 at 11:32 PM, Bombastinator said:

It is a corporation.  They do that.

wake me up when a corporation doesn't