Apple must defend in court bullish statements made by CEO Tim Cook and other executives about 2018 iPhone demand. iPhone sales were actually slowing at the time, leading to a drop in the company’s share price.
A judge ruled Tuesday that a shareholder lawsuit accusing the company of deliberately misleading investors can go ahead.
Watch what you say about iPhone sales, Tim
In November 2018, Cook told investors that “the XS and XS Max got off to a really great start.” And he and other Apple executives painted a rosy picture of iPhone demand.
But shortly afterward, the company asked Foxconn and others to reduce production of new iOS handsets. And in January 2019, the Apple CEO warned investors in an open letter that iPhone sales were weak.
In the time between the two statements from Cook, Apple’s share price dropped about 25%.
In her ruling Tuesday allowing the lawsuit to go ahead, U.S. District Judge Yvonne Gonzalez Rogers wrote: “It is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines,” according to Reuters.
Also on Nov. 1, 2019, Apple stopped revealing how many iPhone units it shipped every quarter. It was the only major handset-maker making this type of announcement, but the change still caused a furor. Rogers said this move “plausibly suggests that defendants expected unit sales to decline.”
The shareholders’ lawsuit was filed in April 2019 by the City of Roseville Employees’ Retirement System, a pension plan for municipal workers in Roseville, Michigan, that lost money on its Apple investment.
“As a result of their purchases of Apple common stock during the Class Period, plaintiff and other members of the Class suffered economic loss,” according to the lawsuit.
It’s moving ahead as Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033 (.pdf).