iPhone Recall Seen Unlikely at Apple Event

Apple Inc is likely to announce a fix for the iPhone 4's reception problems, rather than a recall, at a surprise press conference on the device on Friday, analysts said. Apple has declined to provide any details about the morning event, called late Wednesday, at its corporate headquarters in Cupertino, California. Growing furor over iPhone 4 signal-strength flaws has hurt Apple's shares, knocking billions off its market valuation. Investors will be looking for a fuller explanation of what analysts call a minor issue that has managed to cause a media firestorm. Some users of the phone complain that reception turns weak when the device is held in a certain way that has come to be jokingly called the "iPhone 4 death grip."

Apple has blamed a software glitch that overstates network strength, but others have said the antenna on the redesigned best-selling device is at fault. Cross Research analyst Shannon Cross said she expected Apple to use the press conference to provide a remedy to users who are experiencing the problem, and try to redirect attention back to the iPhone 4's strengths. "We do not expect a recall and believe Apple will quickly move past this issue," Cross wrote in a research note. She said Apple could provide free, low-cost iPhone cases -- which appear to solve the reception problem -- to consumers at a cost of $1 to $2 each, or less than 5 cents a share. Apple could add a thin coating over the antenna in future models to fix the issue, Cross added.

Bloomberg on Thursday reported that Apple's senior antenna expert voiced concern to Chief Executive Steve Jobs in the early design phase of the iPhone 4 that the antenna design could lead to dropped calls. The report cited a person familiar with the matter. When asked about the report, Apple spokesman Steve Dowling said "it's simply not true." Apple's July and August option implied volatility, which measures the expected magnitude of share price movement, surged on Thursday.

Published Date: Jul 16, 2010 11:01 am | Updated Date: Jul 16, 2010 11:01 am