Updated: August 14, 2019
Status: Ongoing Case
On August 14, 2019, Labaton Sucharow was appointed lead counsel in a securities class action lawsuit against Apple Inc. (“Apple” or the “Company”) and certain officers and directors (collectively, “Defendants”). The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 promulgated thereunder, on behalf of all those who purchased or otherwise acquired Apple securities during the period from August 1, 2017 through January 2, 2019, inclusive (the “Class Period”), who were damaged thereby (the “Class”). Labaton Sucharow represent lead plaintiff the Employees' Retirement System of the State of Rhode Island.
Apple is a multinational technology company headquartered in Cupertino, California that designs, develops, and sells consumer electronics, computer software, and online services. The Company’s most profitable product is the iPhone smartphone, which since 2012 has represented more than 40 percent of the Company’s revenue. China is the Company’s third-largest market, and most important growth market, yet is susceptible to geopolitical and macroeconomic uncertainty and increased competition from emerging Chinese smartphone manufacturers.
On January 23, 2017, Apple released a software update which secretly slowed the performance of certain iPhones with battery-related issues. Throughout 2017, these undisclosed intentional slowdowns led consumers to prematurely believe their devices had become obsolete, leading them to upgrade their iPhones at a fast rate. Specifically, beginning in August 1, 2017, Apple began to report a record number of iPhone upgrades. In December 2017, Apple revealed it had been intentionally slowing down certain iPhones, also disclosing that the problem was battery-related, as opposed to device-related. Following this revelation, Apple offered discounted replacement batteries throughout 2018 in light of public outrage.
The action alleges that during the Class Period, Defendants misled investors by making materially false and misleading statements as each of the Defendants knew and failed to disclose or deliberately disregarded that: (1) the intentional slowdown of certain model iPhones, unsustainably boosted iPhone sales during 2017 and cannibalized future sales; (2) the Company’s replacement battery program during 2018 (enacted as a direct and primary response to the Company’s intentional phone throttling during 2017) was negatively impacting iPhone sales; and (3) the U.S.-China trade war, declining Chinese economy, and strength of the U.S. dollar had negatively impacted demand for iPhones in Greater China.
On January 2, 2019, after the close of trading, for the first time in fifteen years Apple slashed its prior quarterly revenue forecast for its already complete first fiscal quarter 2019. On this date, Defendants disclosed that the Company’s revenues for its first fiscal quarter 2019 were only $84 billion, substantially below the expected range of $89 billion to $93 billion the Company had announced eight weeks earlier. Defendants attributed these results to declining iPhone sales, in part, due to more consumers purchasing discounted replacement batteries in lieu of upgrading their iPhones, and the decelerating Chinese economy and U.S.-China trade war impacting iPhone demand in Greater China. On this news, Apple common stock fell precipitously by more than $15 per share, or more than 9 percent, to close at $142.19 per share on January 3, 2019.
The case is In re Apple Inc. Securities Litigation, No. 19-cv-02033.