Filed under: iPod Family, Apple Financial
WSJ on Apple iPod Settlement
In case you haven't heard, first, second, and third generation iPod owners have won a settlement from a class action suite against Apple over the battery life of those iPods. There are lots of little details and options, but basically, it all boils down to Apple may owe you $50.Scott Thurm writes today for the Wall Street Journal (subscription required), noting that "A lawyer for the plaintiffs in the case estimates that the settlement may apply to as many as two million iPods sold before May 31, 2004. That means the settlement, which still needs to be approved by a judge, could cost Apple as much as $100 million." That's a huge hit to Apple, and as a result Apple stock has been declining today.
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Reader Comments (Page 1 of 1)
canis major said 4:19PM on 6-16-2005
Just a whole lot of over reaction going on here -- mark it down to pre WWDC slow news days. Consider...
1. Is $100 million really a huge hit for a company with $4-$7 billion in the bank?
2. Will it really cost Apple $100 million anyway? Just like many of the "big" Microsoft anti-trust settlements only a small percentage of those eleigible will acutally submit claims. I remember reading that one Microsoft settlement only netted about 15% of eligible claimants.
3. I purchased a 1st generation iPod in January of 2002 and have never had battery problems to this day (still getting about 8 hours per charge) -- I am thinking the total possible claims is further reduced by the number of people who (like me) have never had a problem.
4. The $100 million estimate comes from one of the plaintiff's lawyers. It's not like his fee is dependent on the size of that number to begin with, of course he is throwing out the worst case scenario in any event.
So where's the big hit? OK even $15-$20 million is more than I have, but still a pretty small transaction for Apple.
Settlements such as this make sensational press and get the lawyers a chunk of change along with free PR that may lead to new clients, but do not affect the real financial position of the company.
Another way to think about it -- If Apple is going to the mat to fight the Beatles over trademark issues with $100 million or so on the line there, they are not going to roll over a play dead for some class action over battery life. Apple has done the math and is willing to make this one go away with a real cost that is cheaper that the lawyer's fees needed to fight it.
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bt said 4:19PM on 6-16-2005
They may only owe you $25. If you got an AppleCare Protection Plan and had a battery replaced under that, then you get $25.
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slarty said 4:19PM on 6-16-2005
What blows me away is the cost of the lawyers on these deals. Apple is going to pay the plaintiff lawyers $2.8 million. I would love to see a breakdown of those costs.
I did a little editorializing on my blog -
http://www.slartysworld.com/?p=48
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