Analyst: iPhone 4 recall would cost $1.5 billion

Posted on Tuesday, July 13 2010 @ 23:45 CEST by Thomas De Maesschalck
Apple is doing its best to minimize the antenna problems of the iPhone 4, and there's quite a good reason why the company is going through so much hassle to keep the lid on this issue. Not only would a recall be quite damaging to Apple's reputation, it would also be a quite expensive action. Bernstein Research analyst Toni Sacconaghi predicts a full recall of the iPhone 4 would cost $1.5 billion, although he believes it's much more likely, and cheaper, for Apple to issue a free rubber bumper case with each iPhone.
While a recall could be damaging to Apple's reputation, it would also be a costly endeavor, according to some calculations made by Bernstein Research analyst Toni Sacconaghi. In a research note on Tuesday, Sacconaghi estimated that while "a full product recall of the iPhone 4 (is) highly unlikely," it would cost Apple $1.5 billion, or 3.5 percent of its total cash on hand.

What would be more likely--and cheaper--is that Apple could issue a free rubber bumper case with each phone. That would prevent a person's hand from coming into contact with the phone's antenna, which is built into its exterior metal strip. Although Apple charges $29 at retail for the rubber cases, Bernstein estimates that giving them away to iPhone 4 customers would cost the company $1 per unit.


About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.



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