Analysts divided on prospect of iPhone 4 recall from Apple
Apple's scheduling of a press conference Friday to talk about the iPhone 4 could foreshadow a product recall, a free in-store modification of the device's hardware, or a handout of free bumpers, depending on who you ask.
A number of Wall Street's most prominent analysts chimed in on Thursday to share what they think Apple will say at its iPhone 4 press conference, scheduled for 10 a.m. Pacific Time on Friday at its Cupertino, Calif., campus. Some see the scheduling of the press conference as evidence that Apple could initiate a recall of its recently launched handset, while others still believe that a full recall is a long shot.
RBC Capital Markets
Analyst Mike Abramsky noted that the iPhone 4 now has an availability of 3 weeks, up from a shipping time of 7 to 10 days from a few days ago, which could imply a transition in production.
"While some have suggested Apple could provide cases or bumpers, in our view Apple may prefer to more permanently resolve the perceived issue, to avoid ongoing impacts to reputation and brand," Abramsky wrote.
If Apple does institute a recall, it would likely impact the timing of the international launch of the iPhone 4, he said, which is planned to debut in 18 additional countries by the end of July, and a total of 88 by the end of September. He sees a recall costing Apple $1.8 billion in revenue and 40 percent earnings per share in its fourth-quarter guidance.
"We believe Apple will do whatever is necessary to correct the perceived iPhone 4 reception problem," he said. "While the fix may come at some cost, Apple with its $42B cash and $16B/yr cashflow can easily afford it. Apple customer loyalty is deep and resilient, and in our view, we expect iPhone 4 demand to rebound quickly. What could change our view is if Apple is perceived as handling the issue badly, the issue is protracted, or sales/financial impact worse than expected."
Piper Jaffray
Analyst Gene Munster with Piper Jaffray still maintains that a recall is unlikely, but he does believe that a hardware modification is more realistic given the fact that Apple is now holding a formal event.
"It is increasingly likely that the company will make an investment in the brand and calm the PR storm by offering current iPhone owners an in-store fix free of charge," he wrote. "Specifically, we now believe there is a 50% chance the company offers a free modification to current iPhone owners and includes the modification on all future iPhone 4s."
The change would likely result in a disruption of iPhone 4 sales for one month in the September quarter, he said, as the company would need to modify and re-stock phones before it sold them. Munster had previously forecast Apple to sell 9.5 million phones in the September quarter, but he believes those numbers would take a 12 percent hit in the event of a hardware modification.
A full recall, Munster believes, would cost Apple $1 billion in a one-time charge. He believes replacing every iPhone previously sold would present an average cost of $250 per handset to the company.
Munster also sees a 40 percent chance that Apple gives away bumper cases that resolve the reception issue. The rubber cases retail for $29. He said there is a 10 percent chance that Apple will explain the issue and do nothing.
"Despite these issues, consumers love the iPhone 4," he wrote. "Ultimately we believe Apple will manage these issues in a consumer-friendly way and maintain its pristine brand."
UBS
Maynard Um also believes a recall is unlikely to be announced by Apple on Friday. Such an approach, the UBS analyst said, would result in the immediate halt of iPhone 4 sales by Apple and its carrier partners.
He said if the solution presented by Apple is straight-forward, some may wonder why Apple didn't just choose to announce it through a press release. Given the considerable media attention the issue has received, Um said that just isn't an option for Apple.
"We believe an event is necessary as a press release to address what has become a 'loud' issue would likely have drawn more ire," he said.
Um sees the toll the news has taken on Apple's stock as a buying opportunity for investors. UBS has a $320 price target set for AAPL stock.
A number of Wall Street's most prominent analysts chimed in on Thursday to share what they think Apple will say at its iPhone 4 press conference, scheduled for 10 a.m. Pacific Time on Friday at its Cupertino, Calif., campus. Some see the scheduling of the press conference as evidence that Apple could initiate a recall of its recently launched handset, while others still believe that a full recall is a long shot.
RBC Capital Markets
Analyst Mike Abramsky noted that the iPhone 4 now has an availability of 3 weeks, up from a shipping time of 7 to 10 days from a few days ago, which could imply a transition in production.
"While some have suggested Apple could provide cases or bumpers, in our view Apple may prefer to more permanently resolve the perceived issue, to avoid ongoing impacts to reputation and brand," Abramsky wrote.
If Apple does institute a recall, it would likely impact the timing of the international launch of the iPhone 4, he said, which is planned to debut in 18 additional countries by the end of July, and a total of 88 by the end of September. He sees a recall costing Apple $1.8 billion in revenue and 40 percent earnings per share in its fourth-quarter guidance.
"We believe Apple will do whatever is necessary to correct the perceived iPhone 4 reception problem," he said. "While the fix may come at some cost, Apple with its $42B cash and $16B/yr cashflow can easily afford it. Apple customer loyalty is deep and resilient, and in our view, we expect iPhone 4 demand to rebound quickly. What could change our view is if Apple is perceived as handling the issue badly, the issue is protracted, or sales/financial impact worse than expected."
Piper Jaffray
Analyst Gene Munster with Piper Jaffray still maintains that a recall is unlikely, but he does believe that a hardware modification is more realistic given the fact that Apple is now holding a formal event.
"It is increasingly likely that the company will make an investment in the brand and calm the PR storm by offering current iPhone owners an in-store fix free of charge," he wrote. "Specifically, we now believe there is a 50% chance the company offers a free modification to current iPhone owners and includes the modification on all future iPhone 4s."
The change would likely result in a disruption of iPhone 4 sales for one month in the September quarter, he said, as the company would need to modify and re-stock phones before it sold them. Munster had previously forecast Apple to sell 9.5 million phones in the September quarter, but he believes those numbers would take a 12 percent hit in the event of a hardware modification.
A full recall, Munster believes, would cost Apple $1 billion in a one-time charge. He believes replacing every iPhone previously sold would present an average cost of $250 per handset to the company.
Munster also sees a 40 percent chance that Apple gives away bumper cases that resolve the reception issue. The rubber cases retail for $29. He said there is a 10 percent chance that Apple will explain the issue and do nothing.
"Despite these issues, consumers love the iPhone 4," he wrote. "Ultimately we believe Apple will manage these issues in a consumer-friendly way and maintain its pristine brand."
UBS
Maynard Um also believes a recall is unlikely to be announced by Apple on Friday. Such an approach, the UBS analyst said, would result in the immediate halt of iPhone 4 sales by Apple and its carrier partners.
He said if the solution presented by Apple is straight-forward, some may wonder why Apple didn't just choose to announce it through a press release. Given the considerable media attention the issue has received, Um said that just isn't an option for Apple.
"We believe an event is necessary as a press release to address what has become a 'loud' issue would likely have drawn more ire," he said.
Um sees the toll the news has taken on Apple's stock as a buying opportunity for investors. UBS has a $320 price target set for AAPL stock.
Comments
In 3 months the iPhone 4 will bust all sales records internationally and go on to conquer the globe. Even a pygmy in Zombobway has heard all about it by now and will want to get his hands on it.
Apple is having a news conf to "talk" about the iPhone4, presumably by news/industry experts, to address the antenna issue. What if Apple makes a dramatic move and acknowledged and allows a "recall" of the iPhone4 to "correct the issue" - how would this look in the public's eyes? Everyone makes mistakes...not everyone acknowledges them though. A great gesture from Apple would probably gain even more customers thereby "hitting hard" at RIM's already diminishing marketshare and may even hit Droid's line as well.
What if Apple "planned" the iPhone4 antenna fiasco? Reportedly, one of Apple top antenna engineer warned Jobs over a year ago, about potential antenna problems. This goes against what has been seen from Jobs and the Apple crew. We'll see what happens on Friday and, more importantly, two+ weeks later to <end>RIM</end>.
Radio antennas? Same thing. But iPhone 4 antennas? Nope, suddenly all of our experiential history and all laws of electromagnetism are wrong.
Maybe there's a software issue with the iphone handling sudden attenuation, but I've certainly had no problems with mine. All this news sounds like a bunch of non-engineers talking garbage... in other words, nothing a little free pr and an "iphone 4.0.1 update" can't fix. Gee, I hope Steve Jobs is good at speaking in public...
1, If you want a bumper, Apple will give you $30 credit to purchase one at Apple Store.
2, Apple will exchange the phone (with a brand new one) if you think you have a defective unit.
3, If you are not satisfied with the phone, you can return it with a full refund.
what marketing plan is that.....lets alienate our loyal fans to get more "talk time"
it's how they handle this which will either build loyalty or break it down. and all those other phone companies are just drooling over this mess. don't be silly
now i would support this concept, that short sellers are pushing their MS buddies to push this out as much as possible, i wonder if consumer report employees do short selling???
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I used to have a tv with an antenna. When reception was bad I would touch the antenna, and reception got better - by touching the antenna I became part of the antenna and reception improved.
Radio antennas? Same thing. But iPhone 4 antennas? Nope, suddenly all of our experiential history and all laws of electromagnetism are wrong.
Exactly.
Before quoting all these analysts, I wonder if the author asked them where they got their electrical engineering degrees. Asking financial analysts (especially clueless ones) to understand what is wrong with the iPHone is insane.
I think Apple will offer "all of the above"
1, If you want a bumper, Apple will give you $30 credit to purchase one at Apple Store.
2, Apple will exchange the phone (with a brand new one) if you think you have a defective unit.
3, If you are not satisfied with the phone, you can return it with a full refund.
That's not really that big a leap. They're already doing #2 and #3. If offering a store credit shuts people up, it might be worth doing.
Unfortunately, it won't shut some of the loudest whiners up. For example, see.....
I don't want no cheap plastic bumper -- I want a FIX!
It's clear from your posting history that NOTHING is going to satisfy you. Take the phone back and get a refund. That's your fix.
After all, I want a full sized SUV that gets 90 miles per gallon. My wants don't make it mandatory for someone to meet them.
I think Apple will offer "all of the above"
1, If you want a bumper, Apple will give you $30 credit to purchase one at Apple Store.
2, Apple will exchange the phone (with a brand new one) if you think you have a defective unit.
3, If you are not satisfied with the phone, you can return it with a full refund.
The only new option would be #1, so I think they clearly need to do more to restore trust. To date, they've done less to satisfy complaints than they did to address the howls of protest from early iPhone buyers when the price was lowered shortly after the introduction. Conspicuously less -- and the stakes are far higher now. No half-measures such as this will cut it.
It'll be something like:
I used to have a tv with an antenna. When reception was bad I would touch the antenna, and reception got better - by touching the antenna I became part of the antenna and reception improved.
Radio antennas? Same thing. But iPhone 4 antennas? Nope, suddenly all of our experiential history and all laws of electromagnetism are wrong.
Maybe there's a software issue with the iphone handling sudden attenuation, but I've certainly had no problems with mine. All this news sounds like a bunch of non-engineers talking garbage... in other words, nothing a little free pr and an "iphone 4.0.1 update" can't fix. Gee, I hope Steve Jobs is good at speaking in public...
You are aware there is a difference between touching a radio or TV antenna and the problem here, which is bridging two different antennas that are supposed to touch.
Next time, try touching the radio antenna or a SW antenna to the TV antenna while both devices are on and see what happens.
Apple's scheduling of a press conference Friday to talk about the iPhone 4 could foreshadow a product recall, a free in-store modification of the device's hardware, or a handout of free bumpers, depending on who you ask.
A number of Wall Street's most prominent analysts chimed in on Thursday
Don't forget: Analysts are always wrong.
They talk about three actions, but none of them are what Apple has already told us. They are issuing a software fix. Hopefully, when it is released today and demoed tomorrow, all this silliness will end.
Even a pygmy in Zombobway has heard all about it by now and will want to get his hands on it.
He's be an adventurous pygmy to travel all that way! I bet he'd have a lot of time on his hands.
http://technologme.com/apple-fix-iph...l-bumper/1750/
I think Apple will offer "all of the above"
1, If you want a bumper, Apple will give you $30 credit to purchase one at Apple Store.
2, Apple will exchange the phone (with a brand new one) if you think you have a defective unit.
3, If you are not satisfied with the phone, you can return it with a full refund.
Good steps, but Apple should silently alter their production process to include a fix.
And according to this article, they already have:
http://www.macrumors.com/2010/07/15/...eing-deployed/
Apple's scheduling of a press conference Friday to talk about the iPhone 4 could foreshadow...a free in-store modification of the device's hardware....
Hopefully, they'll come out with some actual test data where, unlike CR, they compare every single phone out there in terms of reception, hand position, etcetera. If they can PROVE beyond a shadow of a doubt that the antenna in the iPhone 4 is superior to anything else out there when the phone is held in a certain way, and is at least the equal of anything out there when the antenna is covered, that will be huge. Logically, the next step would then be to acknowledge that the addition of a coating/cover will ENHANCE the ability of the phone to "hold" a signal.
Finally, they should offer this coating/cover to everyone free of charge (i.e., free shipping & handling) to ensure that the iPhone will always give the best possible signal of any cellphone.
But iPhone 4 antennas? Nope, suddenly all of our experiential history and all laws of electromagnetism are wrong.
Incredible what the bloggers think we'll believe, eh? Do they really think that we're stupid enough to believe that? Yeah right. All the laws of electromagnetism are wrong.
Tell that to Maxwell and he'd be spinning in his grave!
I used to have a tv with an antenna. When reception was bad I would touch the antenna, and reception got better - by touching the antenna I became part of the antenna and reception improved.
Radio antennas? Same thing. But iPhone 4 antennas? Nope, suddenly all of our experiential history and all laws of electromagnetism are wrong.
Maybe there's a software issue with the iphone handling sudden attenuation, but I've certainly had no problems with mine. All this news sounds like a bunch of non-engineers talking garbage... in other words, nothing a little free pr and an "iphone 4.0.1 update" can't fix. Gee, I hope Steve Jobs is good at speaking in public...
I'm old enough to remember when the old remote control tvs could change stations by just jiggling a set of keys in front of it. Ha ha!!!
Oh sh**! I'm old. LOL!
I love my iphone 4!!! Taking pictures in low light is amazing!!!!!! Just freaking amazing. the phone is a masterpiece. Ok the reception is there for some but after three weeks of having the phone I never had a dropped call. Yeah when I was in an area with bad reception the bars went down when I touched the left corner. But that is when the phone is held without a case. In a case there ain't nothing going to happen.
Sorry for the split verbs. Just wok up. Old folks sleep a lot.
Don't forget: Analysts are always wrong.
This is not true.
StarMine rates analysts on a curve based on the accuracy of their predictions vis-a-vis their peers. Roughly 25% of analysts receive four or five stars for their accuracy and thus receive the "star-rated analyst" title.
Of the analysts mentioned here, Abramsky is the only star-rated analyst. Munster most definitely is not.
The biggest problem is that AI (and other Apple rumor sites) lend credence to all analysts equally, without pointing out that specific analyst's rating. We'd all have a higher appreciation of star-rated analysts (and disdain for blathering idiots) if those who write these sort of articles highlight the individual analyst's accuracy. AI sometimes mentions a particular media outlet's track record, but this almost never occurs with analysts; they seem to take any analyst's word as gospel.
No analyst has a 100% track record, but it is false to say they're all wrong all the time.