Apple Settlement Claim: Battery Saga Finally Ends As Millions Of IPhone Users Await Payout

(Photo by Brittany Hosea-Small / AFP) (Photo by BRITTANY HOSEA-SMALL/AFP via Getty Images)

AFP via Getty Images Key takeaways

A long-running dispute over iPhone batteries is about to wind up. First accused of deliberately slowing down phones in 2017, Apple is now shelling out as much as $500 million to settle the class action lawsuit.

It’s another spot of bad news for the tech company, which has seen its shares decline after a lackluster earnings beat. The Apple iPhone 15 could be the company’s saving grace to stem the share price’s decline over the last few weeks, but not everyone is convinced. Let’s dive in.

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What’s happening with Apple’s battery settlement?

Millions of iPhone users who noticed a slowdown in their phone’s performance after a software update are set to get a payout. Apple is said to be paying out between $310 and $500 million to 3.3 million for the ‘software throttling’ tactic, which users claimed was a cheap ploy to get users to upgrade to a new phone sooner than they had anticipated.

Apple has always denied the claims, saying the software update was meant to prolong the lifespan of the devices and that the phones would go back to normal speed when the battery was replaced. At the time, replacing a battery cost $75.

Each plaintiff is set to receive between $65 to $90, depending on the number of claims submitted. Owners of iPhone 6, 6 Plus, 6S, 6S Plus and SE models running iOS 10.2.1 or later and iPhone 7 and 7 Plus running iOS 11.2 or later before Dec. 21, 2017, could be eligible for the payout.

There’s no word yet on when the claimants will receive their payout, but word is that it’s soon. The registration deadline for the class action was back in 2020, so it’s taken six years to wrap up the proceedings.

How did Apple’s earnings beat go?

Apple’s latest earnings beat was a rare misstep from the Big Tech titan, which became the first company ever earlier this year to achieve a $3 trillion valuation. For the quarter ending July 1, Apple’s revenue was $81.8 billion, down from 1% the same time last year and just missing analyst forecasts of $81.9 billion.

iPhone sales fell 2.4% to $39.7 billion, below the consensus estimate of $40.3 billion. Mac sales beat expectations at $6.8 billion but are still down 7.2% from last year. iPad sales saw an even more dramatic decline, plunging nearly 20% from last year to $5.8 billion.

It wasn’t all doom and gloom – Apple’s earnings per share beat estimates, arriving at “1.26 a share instead of the $1.19 expected. And the services segment performed well, accruing $21.2 billion in sales and up 8.2% from the previous year. Apple also confirmed it had added a billion more paid subscriptions across its various services.

Apple CEO Tim Cook said the company continued to experience an “uneven macroeconomic environment”, with revenue affected by currency headwinds. But Wall Street wasn’t impressed, with Apple shares declining 2.4% at the report.

Apple gearing up to launch iPhone 15

Next month marks the Apple iPhone 15 launch, though it’s releasing the latest model against a challenging backdrop. New data from Counterpoint Research predicts smartphone shipments to fall 6% to 1.15 billion devices this year, which would be the worst performance in a decade. A slowdown in the Chinese and U.S. markets is to blame.

That would explain why Apple has allegedly cut production of the iPhone 15 just a month out from its launch. The company plans to build 77 million units instead of the 83 million previously forecasted, and shipping out the new iPhone may be delayed to October instead.

China could give Apple the push it needs to boost sales. The second quarter earnings revealed China sales increased 6.7% to $15.8 billion, far ahead of the $13.6 billion predicted by analysts. Apple has also opened its first store in India, with plans to expand its presence nationwide.

There’s also the much-anticipated Apple Vision Pro headset launch to look forward to. Expected in 2024, the hi-tech goggles promise augmented reality, a new spatial operating system and new avenues for digital content creation. Investors have previously questioned the steep price tag and the delay in production, but the launch could be the blockbuster Apple needs.

The market reaction

Apple’s share price is up nearly 40% since the start of the year, but many of the Big Tech stocks have declined recently – and Apple is no exception. The company’s share price has fallen 11% since August.

However, Wall Street believes the upcoming iPhone 15 launch is the ticket to unlocking stock gains. Wedbush has a target of $220 on the stock, while Citi analysts have predicted $240. Atif Malik from Citi has noted Apple stock outperforms the S&P 500 between June and the September iPhone launch every year since 2016.

On the flip side, what concerned investors about the second-quarter beat was Apple CFO CFO Luca Maestri said the September quarter revenue performance is on track to match the 1% decline in June, surprising Wall Street. The iPhone launch could generate unexpected upside, but with consumer spending squeezed, Apple appears to be preparing for the worst.

The bottom line

Like other tech stocks, Apple is feeling the heat as consumer demand continues to bite. After a ‘meh’ earnings beat and the same predicted for the third quarter, the company is betting on the iPhone 15 to boost sales figures – but rumors around a production cut and delays in shipping could further harm the stock in the short term.

The Apple Vision Pro is an intriguing prospect for investors in the medium term. Whether it’s just a gimmick or it’s the next big thing, Apple has a track record of innovation – and the Vision Pro could change the game for the company.

Apple stock might be down right now, but the upcoming iPhone launch is a possible rocket ship for the share price. Immerse yourself in the heart of the tech revival with Q.ai’s Emerging Tech Kit. A carefully curated mix of tech stocks and ETFs, it’s attuned to the rhythm of tech progression.

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