In July 2000, it is alleged that Apple introduced its new Power Mac G4 Dual Processor, G4 Cube and iMac personal computers, representing that they were exceptionally powerful, fast and attractive, coming with particularly attractive designs and containing new and revolutionary features.
Apple is also said to have claimed that the development of these new products was completed, they were ready for mass production and would be available in quantity very shortly. In addition, it is alleged that Apple forecasted strong revenue and earnings per share (EPS) for that quarter.
However, just over three weeks after the alleged announcement, Apple revealed revenue and EPS figures much less than those predicted, shocking investors, and blaming the shortfall on poor sales to its education market and poor consumer acceptance of its personal computer products.
In addition, contrary to the optimism regarding the release of the new computers, some of the products were late to the market, had defects and lacked features which were essential for market success, according to the class action lawsuit. The resulting stock decline wiped out over $10 billion of Apple’s market capitalisation in just a few days.
A second case has been brought against Loudcloud, the current venture of Netscape founder Marc Andresson. Like the case against Apple, it is alleged that Loudcloud’s omissions resulted in investors overpaying for stock. The California based e-business services company is accused of failing to disclose important information including plans to restructure and the cancellation of a major contract.