Apple's revenue revision spawns second class action investigation

Posted:
in AAPL Investors edited January 4
Following the revision to Apple's earnings estimates on Wednesday, a second law firm has started investigating Apple's public claims about its disclosures surrounding business in China.

Apple CEO Tim Cook and CFO Luca Maestri
Apple CEO Tim Cook and CFO Luca Maestri


Just three days after Apple CEO Tim Cook published a revision to Apple's earnings estimate for the holiday quarter, New York's Bronstein, Gewirtz & Grossman has declared that it too is investigating if Apple has violated federal securities laws.

The lawfirm is questioning facts surrounding the announcement that Apple is expecting to end the quarter with $84 billion in revenue, a figure down more than 7 percent from an anticipated $89 billion to $93 billion forecast issued at the end of fiscal 2018. Cook blamed the cut on weak iPhone demand in Greater China and "other emerging markets" for the most part.

As with the previous investigation announced hours after the earnings revision, the firm is doubting Cook's statement from the previous quarter about business in China.

"Our business in China was very strong last quarter. We grew 16 percent, which we're very happy with," Cook said. "iPhone in particular was very strong, very strong double-digit growth there."

Beyond Apple, Intel, Ford, and other Fortune 500 companies have also expressed concerns about the Chinese economy in November and December 2018. Also like Apple, Intel and Ford noted positive results from China in the quarter ending in September 2018.

Comments

  • Reply 1 of 16
    SpamSandwichSpamSandwich Posts: 30,558member
    Lawyers will be lawyers.
    randominternetpersonwatto_cobra
  • Reply 2 of 16
    dewmedewme Posts: 1,894member
    I’m confused. I’ve seen many companies, including ones I’ve worked for, revise their guidance when the actuals are trending too far from the estimates. This is all part of being transparent and operating in good faith. Nobody likes surprises, especially bad ones, so the best way to handle bad news is to put it out there early so those affected have as much time as possible to deal with it on their end. When did operating a business in an open and honest manner become a prosecutable offense?
    JWSCwatto_cobra
  • Reply 3 of 16
    Just keeps getting better. Now companies are expected to be ridiculously accurate reading their crystal ball into the future?  Quite frankly I’m surprised he was accurate to within 7%. 

    The stock market is nothing but legalized gambling, and investors / lawyers are just looking for someone to blame / sue for the recent stock plunge.
    muthuk_vanalingamsteinm88299watto_cobra
  • Reply 4 of 16
    Just keeps getting better. Now companies are expected to be ridiculously accurate reading their crystal ball into the future?  Quite frankly I’m surprised he was accurate to within 7%. 

    The stock market is nothing but legalized gambling, and investors / lawyers are just looking for someone to blame / sue for the recent stock plunge.
    There we go again.....if your pocketbooks are full and bulging, somebody will find ways get some of it...its a fact Jack
  • Reply 5 of 16
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.
    aaploutsiderwatto_cobra
  • Reply 6 of 16
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.

    How a realist looks at this statement:

    "Our business in China was very strong last quarter (does he mean Apple's initiatives to grow in China on top of the 16th percent?). We grew 16 percent (in what? selling iPhone X? selling services? expanding factories? ramping up production? what exactly?), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (in what? selling services? because it definitely isn't in total iPhone unit sales in China per year)"

    How a normal forum Apple fanatic/heretic looks at this statement:

    "Our business in China was very strong last quarter (yeah! See Tim Cook said it was strong and he can't lie!). We grew 16 percent (yeah! See! This is growth here. He can't lie about this!), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (clearly Tim Cook said that the iPhone was strong there, and Apple can't lie about it! This is a fact!)"

    edited January 4 muthuk_vanalingam
  • Reply 7 of 16
    flaneurflaneur Posts: 4,494member
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.

    How a realist looks at this statement:

    "Our business in China was very strong last quarter (does he mean Apple's initiatives to grow in China on top of the 16th percent?). We grew 16 percent (in what? selling iPhone X? selling services? expanding factories? ramping up production? what exactly?), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (in what? selling services? because it definitely isn't in total iPhone unit sales in China per year)"

    How a normal forum Apple fanatic/heretic looks at this statement:

    "Our business in China was very strong last quarter (yeah! See Tim Cook said it was strong and he can't lie!). We grew 16 percent (yeah! See! This is growth here. He can't lie about this!), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (clearly Tim Cook said that the iPhone was strong there, and Apple can't lie about it! This is a fact!)"

    And then a certain rogue president starts a trade war . . .
    derekcurriewatto_cobrajony0
  • Reply 8 of 16
    dewme said:
    I’m confused. I’ve seen many companies, including ones I’ve worked for, revise their guidance when the actuals are trending too far from the estimates. This is all part of being transparent and operating in good faith. Nobody likes surprises, especially bad ones, so the best way to handle bad news is to put it out there early so those affected have as much time as possible to deal with it on their end. When did operating a business in an open and honest manner become a prosecutable offense?
    This is par for the course. The question these guys are asking is whether it was indeed done in an "...open and honest manner." Under prevailing governance norms in the US -- notably, the business judgment rule -- Apple will say "yes".

    And this will likely go the way most of these class action lawsuits do: nowhere.
    randominternetpersonmuthuk_vanalingamderekcurriewatto_cobra
  • Reply 9 of 16
    rogifan_newrogifan_new Posts: 3,750member
    flaneur said:
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.

    How a realist looks at this statement:

    "Our business in China was very strong last quarter (does he mean Apple's initiatives to grow in China on top of the 16th percent?). We grew 16 percent (in what? selling iPhone X? selling services? expanding factories? ramping up production? what exactly?), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (in what? selling services? because it definitely isn't in total iPhone unit sales in China per year)"

    How a normal forum Apple fanatic/heretic looks at this statement:

    "Our business in China was very strong last quarter (yeah! See Tim Cook said it was strong and he can't lie!). We grew 16 percent (yeah! See! This is growth here. He can't lie about this!), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (clearly Tim Cook said that the iPhone was strong there, and Apple can't lie about it! This is a fact!)"

    And then a certain rogue president starts a trade war . . .
    Wasn’t that started many months ago? 
  • Reply 10 of 16
    dewme said:
    I’m confused. I’ve seen many companies, including ones I’ve worked for, revise their guidance when the actuals are trending too far from the estimates. This is all part of being transparent and operating in good faith. Nobody likes surprises, especially bad ones, so the best way to handle bad news is to put it out there early so those affected have as much time as possible to deal with it on their end. When did operating a business in an open and honest manner become a prosecutable offense?
    This is par for the course. The question these guys are asking is whether it was indeed done in an "...open and honest manner." Under prevailing governance norms in the US -- notably, the business judgment rule -- Apple will say "yes".

    And this will likely go the way most of these class action lawsuits do: nowhere.
    Exactly.  It's not about the revised guidance per se, it's whether the guidance was given soon enough or if Apple was misleading in their prior guidance.  I expect the lawyers don't actually expect to win, but the payout if they do could be so big it's worth rolling those dice.  If you're going to take someone to court, you might as well go after a firm that saw hundreds of billions of dollars in lost market cap.
    larryawatto_cobra
  • Reply 11 of 16
    flaneurflaneur Posts: 4,494member
    flaneur said:
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.

    How a realist looks at this statement:

    "Our business in China was very strong last quarter (does he mean Apple's initiatives to grow in China on top of the 16th percent?). We grew 16 percent (in what? selling iPhone X? selling services? expanding factories? ramping up production? what exactly?), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (in what? selling services? because it definitely isn't in total iPhone unit sales in China per year)"

    How a normal forum Apple fanatic/heretic looks at this statement:

    "Our business in China was very strong last quarter (yeah! See Tim Cook said it was strong and he can't lie!). We grew 16 percent (yeah! See! This is growth here. He can't lie about this!), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (clearly Tim Cook said that the iPhone was strong there, and Apple can't lie about it! This is a fact!)"

    And then a certain rogue president starts a trade war . . .
    Wasn’t that started many months ago? 
    Yes. And it’s starting to get real now.
  • Reply 12 of 16
    maestro64maestro64 Posts: 4,414member
    Folks the government made a statement today that Apple is the first in a long list of companies who will be putting our a warn since many companies make money in China and their business will be hurt. Two others I hear this morning was McDonalds and Starbucks both recognize 10% of their revenue from China. 

    Keep in mind China has implemented a system which is similar to the US credit history/rating but China has Social or Behavior rating which is more than whether you pay your bills on time and China is using this right now to ding people's ratings if they interact with US based companies in China.

    Imagine if the US Government could affect US consumers behavior by whacking your social standing in society. Hell we already have the social warriors shaming and banning  people on Facebook and Twitter for bad humor. Image if the social warriors went after every person that bought Chinese made products. This is what is going on in China right now.
    watto_cobra
  • Reply 13 of 16
    jimh2jimh2 Posts: 86member
    No company is obligated to report earnings more than quarterly and this is required by the SEC. Many companies try to ease the blow by making an early announcement if the numbers don't line up. They missed by just under 6% which makes is negligible considered they still sold $89,000,000,000 worth of stuff and have the 11th highest revenue of all companies in the world that report revenue, which is above every other tech firm including Samsung. This type of lawsuit is frivolous and we need tort reform to prevent this crap from ever getting to court. Requiring a bond before filing a case would eliminate a lot of these types of cases.
    watto_cobra
  • Reply 14 of 16
    entropysentropys Posts: 1,493member
    Hyenas circling a wildebeest with a sprained leg.
  • Reply 15 of 16
    flaneur said:
    flaneur said:
    More stupidity.

    If there's one thing Tim Cook is famous for it's not giving away any information about what Apple is doing. Whether that be about future products or how the company is doing financially. He's notoriously vague.

    How a realist looks at this statement:

    "Our business in China was very strong last quarter (does he mean Apple's initiatives to grow in China on top of the 16th percent?). We grew 16 percent (in what? selling iPhone X? selling services? expanding factories? ramping up production? what exactly?), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (in what? selling services? because it definitely isn't in total iPhone unit sales in China per year)"

    How a normal forum Apple fanatic/heretic looks at this statement:

    "Our business in China was very strong last quarter (yeah! See Tim Cook said it was strong and he can't lie!). We grew 16 percent (yeah! See! This is growth here. He can't lie about this!), which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. (clearly Tim Cook said that the iPhone was strong there, and Apple can't lie about it! This is a fact!)"

    And then a certain rogue president starts a trade war . . .
    Wasn’t that started many months ago? 
    Yes. And it’s starting to get real now.
    That doesn’t make sense. If anything, the situation is better now. The two countries are in negotiations, and none of the new tariffs will go into effect — it at all they do — until March 30. 

    The Huawei arrest is a poor excuse as well. One, it happened in Canada. Two, in reponse to an extradition request from something that happened during Obama’s tenure and was made by his administration (the details of this are well-reported and well-known; you can look it up). Three, Trump himself was surprised by that news, since it happened while he was in Latin America for the G20 summit (ironically, in a meeting with Xi), and he appears to have been blindsided by it (again, well-reported).
    watto_cobra
  • Reply 16 of 16
    cgWerkscgWerks Posts: 1,893member
    Just keeps getting better. Now companies are expected to be ridiculously accurate reading their crystal ball into the future?  Quite frankly I’m surprised he was accurate to within 7%. 

    The stock market is nothing but legalized gambling, and investors / lawyers are just looking for someone to blame / sue for the recent stock plunge.
    Yes.... but if you and I knew the market was weakening in China (for some time now), and the Qualcomm sales ban must have been known to be a possibility for some time now... then shouldn't Apple have factored those into the forecasts?

    anantksundaram said:
    Three, Trump himself was surprised by that news, since it happened while he was in Latin America for the G20 summit (ironically, in a meeting with Xi), and he appears to have been blindsided by it (again, well-reported).
    Deep State. Good way to muck up negotiations, no?
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