Apple Might Face Class Action Lawsuit – Law Firm Investigates After Company Failed to Tell Investors About Slowing iPhone Demand
Apple is under investigation from law firm Bronstein, Gewirtz & Grossman on grounds of violating U.S. federal securities laws. Certain executives have also been included in this investigation and it comes after Apple CEO Tim Cook issued a letter to investors where it stated that the technology giant was slashing its previous earnings estimates from $89-$93 billion to $84 billion. The law firm is conducting the investigation on behalf of Apple shareholders and if sufficient evidence has been accumulated, we could be looking at a class action lawsuit.
Law Firm Has Encouraged Investors to Obtain More Information of Apple Violating Securities Laws
This is the second lawsuit that has happened this week and for the same reasons. Bernstein Liebhard LLP, another New York-based law firm that protects investors’ rights, launched a similar investigations operation against the company. Both law firms are digging around the positive language that Cook previously used when talking about China, and a more negative language when addressing shareholders just yesterday.
The executive states that Apple did not foresee the economic deceleration in Greater China, leading to slower iPhone demand. Details on the investigation are given on the law firm’s website and have been provided below:
On January 2, 2019, Apple revealed that its revenue for the first fiscal quarter of 2019 would be more than 7% lower than it expected because of “[l]ower than anticipated iPhone revenue, primarily in Greater China, [which] accounts for all of [Apple’s] revenue shortfall to [its] guidance and for much more than [its] entire year-over-year revenue decline.” Conversely, on November 1, 2018 CEO Tim Cook stated during Apple’s fourth quarter 2018 conference call, that “[o]ur 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.” Following this news, Apple stock dropped $11.97 per share, or roughly 7.5%, during aftermarket trading hours on January 2, 2019.
Both firms are checking in on whether Apple failed to inform investors regarding slowing iPhone demand, especially in China, which is the largest smartphone market in terms of volume. Neither Apple’s executives nor Tim Cook have stepped forward to provide comment on the latest saga, but we are certain we’ll hear something from them in the near future.
Apple lowered its revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year. The first quarter earnings of the company will be made available publicly on January 29. While iPhone demand has slowed, the company states that it will be a record quarter when it comes to services, with other product lines such as the iPad and Mac doing well too.
What thoughts do you have to share regarding the latest investigations? Tell us down in the comments.
Sources: Bronstein, Gewirtz &