Apple Faces Possible Class Action Suit For Securities Fraud After Guidance Revision
An investor rights law firm is investigating potential security fraud claims on behalf of shareholders of Apple and may end up filing a class action lawsuit. The investigation comes after Apple lowered its earnings guidance for its first fiscal quarter of 2019, in which Apple CEO Tim Cook said he expects the company to end the quarter with $84 billion in revenue.
That figure is more than 7 percent lower than Apple's previous forecast of $89 billion to $93 billion, which it issued at the end of its fiscal 2018.
"When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter," Cook wrote in a long-winded letter to investors.
Cook blamed the lowered forecast on several different factors, including the timing of its latest generation iPhone launches, a strong US dollar creating foreign exchange headwinds, supply constraints, and economic weakness in some emerging markets. According to Cook, all of those factors (plus some others) resulted in fewer iPhone upgrades than expected.
"On this news, Apple’s stock fell $11.97 per share, or over 7.5 percent, during aftermarket trading hours on January 2, 2019, damaging investors," said Bernstein Liebhard LLP, a law firm headquartered in New York.
The law firm says it is looking into whether Apple and/or its executives may have issued materially misleading business information to the investing public. No lawsuit has been filed yet, though the law firm is inviting Apple shareholders to leave their contact information in case it moves forward with a class action lawsuit.