Apple Faces Second Class Action Lawsuit Threat Over Failing to Warn Investors About Slowing iPhone Demand

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New York-based law firm Bronstein, Gewirtz & Grossman has announced it is investigating whether Apple and certain executives violated U.S. federal securities laws after the company lowered its revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year earlier this week.


The law firm is conducting the investigation on behalf of AAPL shareholders, with potential for a class action lawsuit, and encourages affected investors to obtain additional information and assist the investigation by visiting its website.

Bernstein Liebhard LLP, another New York-based investor rights law firm, launched a nearly identical investigation of Apple earlier this week.

Apple CEO Tim Cook in a letter to shareholders this week disclosed that Apple's revenue for the quarter just ended will be approximately $84 billion, significantly lower than its original guidance of $89 billion to $93 billion, due to "lower than anticipated iPhone revenue, primarily in Greater China."

Both investigations contrast the positive language that Cook has previously used when speaking about China with the weaker language used in his letter to shareholders this week, in which he said Apple "did not foresee the magnitude of the economic deceleration, particularly in Greater China."
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."
In other words, both law firms are investigating whether Apple failed to warn investors about slowing iPhone demand, particularly in China.

AAPL closed at $142.19 on Thursday, down 36 percent from a closing price of $222.22 on November 1, immediately prior to Apple's last earnings report. As a result, Apple's market valuation has plunged from a peak of around $1.1 trillion to under $700 billion, falling behind rivals Amazon, Microsoft, and Google.

Article Link: Apple Faces Second Class Action Lawsuit Threat Over Failing to Warn Investors About Slowing iPhone Demand
 
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Christian 5G

macrumors 6502a
Jun 16, 2010
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It’s just getting worse and worse for Apple, this might not be anything because it’s a class action, but there’s really nothing good I have seen about Apple for a while now...

I’ll be honest but few weeks ago I got a chance to play around with one of the android phones and was fascinated by many tasks it was performing as well as the awesome “hey google”.

I am really considering giving it a try for my next phone purchase.
 
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Ramchi

macrumors 6502a
Dec 13, 2007
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Had investors knew of slowing sales, whether they would have filled the gap in revenue by making bulk purchases of iPhones? What if Apple posted higher than expected revenue, still they would go after Apple or only when it is lower?
 

jscooper22

macrumors regular
Feb 8, 2013
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Syracuse, NY
As much as investment drives an economy, and is generally positive (I think, anyway), it does have the downside of making investors customers and customers commodities to please them.
 
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adamjackson

macrumors 68000
Jul 9, 2008
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Two law firms announcing on social media that they're investigating if there's even a case is pretty far removed from two law firms have filed a case in court. These are just opportunistic 'ambulance chaser' firms trying to bill out millions in fees in the form of class action suits so investors can each get $25 on the backs of opportunistic lawyers.
 

Baymowe335

macrumors 603
Oct 6, 2017
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Even with them adjusting the guidance doesn't it still come out to their second biggest quarter ever...?
And highest EPS quarter ever.

This will go nowhere. I’m an investor and even I don’t think Apple did anything wrong here. Sometimes you have to put on your big boy pants and understand we live in reality.

This was always a risk and Apple disclosed that it happened in China and emerging markets. Proving when they knew and when they needed to tell investors will be impossible.
 

HacKage

macrumors 6502
May 14, 2010
415
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Had investors knew of slowing sales, whether they would have filled the gap in revenue by making bulk purchases of iPhones? What if Apple posted higher than expected revenue, still they would go after Apple or only when it is lower?
It's nothing to do with the actual slowing down of sales, it's the fact that 2 months ago Tim Cook came out and said growth was in double digits for iPhones, yet they had to give their first profit warning in 17 years due to "lower than anticipated iPhone revenue".

Which is it? Are iPhone sales showing double digit growth, which linked to higher price tiers should mean far higher revenue, or are the sales not that good and you inflated your expected results in order to increase investment?

Apple's value has increased to what it was, the first $1T American company based on year on year improvements financially. Investors couldn't get enough of it, and neither could the public. Then things changed and Apple tried to hide it by not giving sales figures in the reports and the investors saw right through it.
 

gnipgnop

macrumors 65816
Feb 18, 2009
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Are there examples of other companies that do a lot of business in China predicting a major shortfall for this same time period? The last time the United States engaged in major tariff battles was back in the 1920s. It's not like Apple had recent history to base their evaluations on. In some ways, it's uncharted territory for the current global economy.
 

racerhomie

macrumors 6502
Aug 14, 2015
346
594
It’s just getting worse and worse for Apple, this might not be anything because it’s a class action, but there’s really nothing good I have seen about Apple for a while now...

I’ll be honest but few weeks ago I got a chance to play around with one of the android phones and was fascinated by many tasks it was performing as well as the awesome “hey google”.

I am really considering giving it a try for my next phone purchase.
Don’t worry .No body cares. There are 1.4 Billion iOS users. Only growing.You won’t be missed.
 

Baymowe335

macrumors 603
Oct 6, 2017
5,218
9,144
New iPad Pro is $150 more expensive, new iPhones staring with iPhone X are $150 more expensive than plus model. Tim Crook cares about profit only.
No, investors are the ones who want more and more profit. That’s how this works.

Go read about how much Visa, Disney or AT&T have increased prices. This isn’t an Apple thing. It’s the life of a publicly traded company.

Welcome to business.