An “investor rights law firm” says it will investigate Apple for potential securities fraud, following Wednesday’s revised Q1 2019 earnings guidance for the company.
Self-professed “nationally acclaimed investor rights law firm” Bernstein Liebhard on Wednesday said it is investigating allegations of potential securities fraud violations on behalf of Apple shareholders, noting the company’s recent earnings forecast cut runs counter to comments made on the health of its Chinese business.
The firm announced the potential class action law suit on its website shortly after Apple’s announcement on Wednesday that it would be lowering its earnings guidance for the first fiscal quarter of 2019.
On January 2, 2019, during aftermarket hours, Apple disclosed that its revenue for the first fiscal quarter of 2019 would be over 7% lower than it previously expected due to “[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.” However, on November 1, 2018 during Apple’s fourth quarter 2018 conference call, CEO Tim Cook stated 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.”
On this news, Apple’s stock fell $11.97 per share, or over 7.5%, during aftermarket trading hours on January 2, 2019, damaging investors.
In the letter to investors, Cook announced the company is expecting to have brought in $84 billion in revenue, an amount that is 7% less than an anticipated $89 billion to $93 billion forecast issued at the end of fiscal 2018. Cook said the drop in income was due to weak iPhone demand in China and “other emerging markets.”
The law firm says Cook’s statements amount to “materially misleading business information” issued by an Apple executive.
And of course, the law firm also provided a handy link to a page where Apple stockholders could join a possible class action lawsuit.