Analysts: ‘Voluntary’ Recall a Possibility for Apple

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Despite reports to the contrary, some analysts are predicting a limited ‘voluntary’ recall of Apple iPhone 4s. A voluntary recall would be limited to only those iPhone 4 owners who experience reception problems. The analysts also expect CEO Steve Jobs must take be humble during a Friday press conference expected to address the antenna issue.

Thursday, both the New York Times and the Wall Street Journal cited sources denying Apple will announce a recall. The Cupertino, Calif. company also publicly denied a Bloomberg report that Jobs new of potential reception problems as early as 2009, but overrode the objections of an in-house antenna expert.


A likely scenario for Friday’s announcement is Apple will offer to replace handsets of only iPhone 4 owners with faulty reception who opt into the replacement program. Not only will such a limited recall save Apple from a PR nightmare, the move would cost the company between $131 million and $525 million to replace 400,000 to 1.5 million handsets, according to RBC Capital Markets’ analyst Mike Abramsky. Apple also is likely to offer a free bumper to see if that solves the reception problem, plus beginning shipping updated versions this week, thus ensuring consumers thinking of buying an iPhone don’t walk away discouraged.

However, if Jobs does not handle the announcement correctly, it could damage Apple’s brand. “Steve has to show Apple cares deeply about its customers,” Abramsky said. “Can Apple and Steve pull this off? My call is they will.”

Gleacher & Company’s Brian Marshall believes Jobs will offer customers an apology, along with a free bumper and a $30 gift card. Apple will also update future iPhone 4s with a nonconductive coating that would alleviate the antenna problems, the analyst expects.

Like Abramsky, Marshall expects Jobs will assume a humble stance, but emphasize the problems grabbing headlines is experienced by under 1 percent of iPhone 4 owners.

Another analyst, Shaw Wu of Kaufman Bros., sees a recall as “unlikely.” However, sources tell Wu that Apple is “furiously working” on a way to improve the iPhone 4’s antenna algorithms and take into consideration with body differences. Sources say the solution is “complex but not insurmountable.” Thursday, the New York Times quoted an Apple worker that the reception problems were due to communications software, opening the possibility the company could release a software fix.

[AppleInsider]

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