2018 was not a good year for Apple, at least in relation to its flagship product, the iPhone, since due to the low cost battery replacement program, much fewer iPhones were sold than the company had initially anticipated. In addition, the market began to show signs of being saturated, at least in the high range.
All listed companies have the obligation to announce what their future revenue forecasts. Apple initially announced a revenue range of $ 89.000 billion to $ 93.000 billion for the first fiscal quarter of 2019. Against all odds, it revised those figures by forecasting revenue of $ 84.000 billion.
That figure is $ 5.000 billion below the least optimistic amount, causing a fall in the company's shares by 9% after hearing the news. The reasons for this drop in income are those that I have commented in the first paragraph of this article, in addition to currency fluctuations, the end of subsidies for many operators and trade tensions with China.
The review of the numbers was spot on, as Apple finally claimed it had generated $ 84.300 billion in revenue. As we can read in Patently Apple, Apple has received the fourth lawsuit for breach of fiduciary obligation and violation of federal laws of securities by misrepresenting the position of the company at the time the first estimates were issued.
It is a derivative action of the shareholders, initiated in law and for the benefit of Apple against some of its officers and directors in order to remedy violations of state and federal laws by the defendants that have occurred since 1 August 2017 through January 2, 2019 (the “Relevant Period”), and which have caused, and continue to cause, substantial damage to Apple, including monetary losses and damage to Apple's reputation and goodwill [… ].
During the Relevant Period, Defendants misrepresented and / or failed to disclose multiple material factors that negatively impacted Apple's iPhone sales and revenues, including that, among others:
1 - Consumer demand for new iPhone models was adversely affected by Apple sales of a deeply discounted battery replacement program for older iPhone models, as customers chose not to upgrade or delay the upgrade .
2 - Macroeconomic factors, including a growing trade war with the United States, increased competition from cheaper smartphones, and the sluggish economy, likely adversely affected, and were, Apple's iPhone sales in China.
3 - That as a result of the foregoing, Defendants lacked a reasonable basis in issuing positive iPhone sales and revenue guidance for the first quarter of 2019, and in publicly denying the existence and negative impact of the foregoing.
In short, that Apple's initial claim about expected revenue was very optimistic. When you released the second forecast correcting the first, the board of directors damaged the company's reputation and caused the price of its shares to fall. John Votto, a shareholder of the company, has filed this fourth lawsuit on behalf of Apple against his own board of directors.
This suit has very short legs. When the board of directors announced the first figures, he did it in good faith at the time and had no reason to manipulate the market, since the main loser would be the company itself.
