Analyst: iPhone 4 recall could cost Apple US$ 1.5 billion

With all the negative issues surrounding the iPhone 4, some people are now suggesting for Apple to recall the device that could potentially cost the company as much as US$ 1.5 billion, according to an analyst.

With all the negative issues surrounding the iPhone 4, some people are now suggesting for Apple to recall the device that could potentially cost the company as much as US$ 1.5 billion, according to an analyst. Bernstein Research analyst Toni Sacconaghi says that although a full product recall for the device is “highly unlikely,” Apple could potentially lose more than 3.5 percent of its total cash on hand with the move.  

What could be more likely though suggest the analyst is for the company to give free bumper cases, which currently retails for US$ 29, to customers to solve the infamous “death grip issue”. The analyst believes that giving them away to iPhone 4 users would only cost the company US$ 1 per unit to somewhat remedy the situation:

“It could be done immediately, would directly address the Consumer Report’s concern, and would be financially immaterial. 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.”

Further looking at the long term consequences for Apple, the analyst says:

“Perhaps the bigger, longer-term concern for Apple investors is the emerging pattern of hubris that the company has displayed, which has increasingly pitted competitors (and regulators) against the company, and risks alienating customers over time. Examples of its behavior have included its limited disclosure practices (Steve Jobs’ health; plans for deploying its cash balance), its attack on Adobe’s Flash, its investigation into its lost iPhone prototype (which culminated in a reporter’s home being searched while he was away and computers being removed), its restrictions on app development, and its ostensibly dismissive characterizations of the iPhone’s antenna issues (i.e., phone needs to be held a different way; a software issue that affects the number of bars displayed). The worry is that collectively, these issues may, over time, begin to impact consumers’ perceptions of Apple, undermining its enormous prevailing commercial success.”

Apple has issued an open letter earlier this month stating that the phones signal issues were largely due to an inaccurate formula for calculating signal strength and says they are now working on a software fix to resolve the issue.

Via [CNET]