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I was talking with friends about Apple switching from Intel CPUs to their own, and an interesting question popped up.

Since we're not privy to any of the details, this is purely speculative and out of curiosity.

Apple has been a customer of Intel for a very long time. At the same time, they've worked on their own CPU design for supposedly quite a few years. It is likely that Intel knew about it at some point and had some discussions with Apple about it.

At the moment Intel knew, with certainty, that it will happen, possibly through some confidential discussion with Apple, they also knew it would affect their revenues and have an impact on their stock price.

If a company is aware, through confidential communication that can't be disclosed, that some future event will impact all of their shareholders, what are their options?

  • They can't disclose the confidential information.
  • They have a duty toward the shareholders to warn them in major events.

How does this get resolved?

ohwilleke
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Thomas
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3 Answers3

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There is no general "Duty to disclose everything that could have a bearing on the financial state of a corporation". There would be a duty to disclose material facts before seeking stockholder approval of a major business transaction (here, too). Intel might, for some reason, be considering a transaction motivated by this potential loss of revenue, so it would be at that point that Intel would have a duty to disclose the reason for the transaction. The point is that the duty to disclose (to stockholders) relates to being fully truthful about the reasons for a transaction, so that the shareholder can make an informed decision when they vote.

user6726
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You don’t disclose confidential information

The Australian Stock Exchange (ASX) rules on continuous disclosure contain exceptions in 3.1A. There are a number of provisions that the information in the OPs question would fall under, any one of which is sufficient to trigger the exception.

Dale M
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In the US, companies will disclose broad reasons for changes to revenue in their quarterly/annual reports (10-K and 10-Q), but there is no requirement to disclose material changes to sales to shareholders before then. Some companies may release guidance prior to the release of quarterly or annual reports if there are significant changes to revenue or expenses, but it is not required.

Certainly, companies who, for example, are removed from Walmart shelves do not release this information, they work to recover the lost sales.

Tiger Guy
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