There’s no evidence Apple plans to issue a recall for the new iPhone 4, but that’s not stopping Bernstein Research analyst Toni Sacconaghi from estimating a product recall would cost the company some US$1.5 billion, according to CNET.
Mr. Sacconaghi’s product recall cost estimate follows a Consumer Reports study that rates the iPhone 4 as the best smartphone, but refuses to suggest the device as a good purchase because of antenna-related cell signal strength issues.
“When your finger or hand touches a spot on the phone’s lower left side — an easy thing, especially for lefties — the signal can significantly degrade enough to cause you to lose your connection altogether if you’re in an area with a weak signal,” Consumer Reports said. “Due to this problem, we can’t recommend the iPhone 4.”
While Mr. Sacconaghi called an iPhone 4 recall “highly unlikely,” he siad Apple could give away its Bumper cases to customers to address signal loss concerns. “It could be done immediately, would directly address the Consumer Report’s concern, and would be financially immaterial,” he said. According to his estimates, giving away Bumper cases to customers would cost Apple only abut $10 million.
He added “While it would force Apple to ‘acknowledge’ a design issue with the iPhone, we believe that consumers are increasingly aware of the antenna issue, and remedying it rather than dismissing or ignoring it appears most appropriate.”
So far, Apple has suggested that users try holding their phone differently to avoid signal loss issues, and has acknowledged a software issue is causing the phone to display artificially high signal strength bars. The company has promised a software fix will be released in the coming weeks.
Apple is currently trading at $251.60, down 0.20 (-0.08%).