Arizona is leading a multi-U.S. state investigation into whether Apple Inc.’s (AAPL) deliberate slowing of older iPhones violated deceptive trade practice laws, according to documents seen by Reuters.
In the ongoing probe since at least October 2018, investigators have asked Apple for data about “unexpected shutdowns” of iPhones and the company’s throttling, or slowing down, of the devices through power management software.
Last week, a separate document obtained from Texas by a tech watchdog group showed that Texas’ attorney general was involved in the investigation but did not specify the issues being investigated nor which state was leading the probe.
A majority of U.S. states, representing both Democratic and Republican attorney generals, are joining the investigation.
Back in 2017, Apple came under fire when Primate Labs, the maker of software for measuring a phone’s processor speeds, revealed that some iPhones became slower as they aged.
Apple later acknowledged that it reduced power demands – which can slow the processor – when an aging phone’s battery struggles to supply the peak current the processor demands. Apple said without its adjustments, iPhones would have unexpectedly shut down from power spikes.
Outraged iPhone users said that appeared to confirm long-held suspicions that Apple slowed older devices to encourage users to buy new phones. In response, Apple publicly apologized and lowered prices on battery replacements.
Earlier this year, Apple agreed to pay up to $500 million to settle a proposed class-action lawsuit related to the battery issues.
Apple stock is up 29% this year with a Moderate Buy analyst consensus that boasts 25 Buys versus 5 Holds and 2 Sells. Meanwhile, the $378.55 average price target indicates shares are now more than fully priced. (See Apple stock analysis on TipRanks).
Ahead of Apple’s Q3 earnings later today, Monness analyst Brian White reiterated a Buy rating on the stock with a $370 price target.
“Although we expect Apple to remain challenged in the current economic environment and the exact timing of the iPhone 12 launch creates near-term uncertainty, we believe Apple’s strong balance sheet, iconic brand, rapidly growing services business, pipeline of innovations, hardline stance on personal privacy and leadership role during this crisis will allow the company to emerge from this downturn stronger than it entered,” White wrote in a note to investors.
White expects Apple to report 3Q revenue of $53.53 billion (down 1% YoY; Street at $52.13 billion) and at least meet his EPS projection of $1.99 (Street at $2.04).
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