Apple shares drop 3.8-percent; WSJ says iPod battery settlement could cost $100 million [UPDATED]

The Wall Street Journal is reporting that the Apple iPod battery settlement could cost the company as much as $100 million, if a judge approves the terms. Apple Computer (AAPL) shares fell 3.8% in pre-market trading.

Full article (paid subscription required) here.

“Tentatively settling a lawsuit that had tarnished the golden image of its iPod music players, Apple Computer Inc. has agreed to give $50 vouchers and extended warranties to customers who have had problems with the lifespan of their batteries,” Matthew Yi reports for The San Francisco Chronicle. “As many as 2 million people may be affected by poor battery life in some older iPods, which could translate to as much as $100 million worth of givebacks for Apple, Eric Gibbs, a San Francisco lawyer representing the consumers, said Thursday.”

“However, analysts said they believe the financial impact on Apple’s bottom line could be far less because a majority of iPod owners probably would not file claims. Also, scores of customers may not still have their older iPods because many routinely ditch their players for newer versions, said Gene Munster, an analyst at Piper Jaffray & Co.,” Yi reports.

Full article here.


  1. The Wall Street Journal must be doing their math on a Windows version of Excel. 100 million would require 2 million claims.

    Even if all 2 million of the potentially affected iPod owners took advantage of the settlement (unlikely, since not everyone has had an issue with their batteries), $50 off retail is not the same as $50 off cost.

    Aren’t these people supposed to be business reporters? They don’t have the slightest understanding of profit/loss. That, or they’re just shooting numbers out their posteriors.

  2. informed sez: “(unlikely, since not everyone has had an issue with their batteries),”

    Obviously informed, you are not informed and you did not read the settlement.

    From the website :

    “You may make a claim if you purchased or acquired a new First, Second or Third Generation iPod on or before May 31, 2004. You are not eligible to participate in this settlement if you purchased or acquired a used iPod, or if you purchased or acquired your iPod after May 31, 2004.

    Please remember that you may claim only one settlement benefit per iPod. If you own more than one iPod, and wish to make claims for multiple iPods, you must fill out a separate Claim Form for each iPod that you own.”

  3. Apple is doing’ the right thing.
    It is costly, but not too much so.
    Glad to see them making it right–too bad it took a lawsuit to bring it about.

    BTW, I have a 2nd Gen iPod and I get about 8 hours out of a full charge, two years and still going. I’m kind off hoping it will die so I can justify getting a 30 gig iPod Photo, but it just keeps going and going….

    So do I exploit the settlement? Seems wrong to me to do that when my iPod works so well.

  4. Isn’t most of that supposed to be in vouchers redeemable only at Apple? If so it could turn out to be more like a happy little Apple Store give-away program than anything else. Might be good for business, long term?

  5. Gackle the Great:

    Yes, they are eligible. But people who haven’t had any issues are still unlikely to file claims. I’ve been eligible for several class action settlements in my life. Few people in this litigeous age haven’t. Still, I’ve never bothered to climb aboard. If I were adversely affected, things might be different. But none of the settlements have been worth my time and effort.

    I stand by my reasoned statement.

  6. I’ve bought about 6 iPods. Some for me, some for friends and family. I’ll be filing. But I have no idea what I’ll do with six coupons for $50 iPod discounts. Buy six more iPods? If so, that’s six more that I wasn’t planning to buy. Could end up helping Apple in the long run. I’ll buy shuffles and give them to friends, who will then be hooked to iTMS and iTunes and will upgrade to full iPods soon.

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