• Bernstein Research Places iPhone 4 Recall Price Tag at $1.5 Billion

    If there is any reason why Apple isn't going to recall the iPhone 4, it may be because of this. According to the calculations presented by Bernstein Research analyst Toni Sacconaghi, embarking on a full product recall would cost an estimated $1.5 billion. And while many are calling on Apple to "do the right thing" and fix the problem before consumer frustrations and corporate image problems are allowed to simmer any longer, it now appears that the cost of a recall would be substantial enough to ensure that cries for a recall will continue to fall on deaf ears.

    The prospect of an iPhone 4 recall seemed outlandish and almost unimaginable until Consumer Reports tore into Apple over its lingering antenna issue and effectively pulled its recommendation for the hugely popular smartphone. In the last twenty-four hours, everyone from prominent media organizations to small tech blogs have broached the subject of a possible recall. On Tuesday afternoon, Sacconaghi put the cost of a recall into perspective by estimating that it could run Apple some 3.5 percent of its total cash on hand.

    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.
    Of course, the biggest problem facing Apple isn't the impact of the "Death Grip" on current iPhone 4 sales. The device is already a huge success. The real and much deeper problem relates to the future of Apple and its product releases. "Perhaps the bigger, longer-term concern for Apple investors is the emerging pattern of hubris that the company has displayed," says Sacconaghi, "which has increasingly pitted competitors (and regulators) against the company, and risks alienating customers over time."

    This article was originally published in forum thread: Bernstein Research Places iPhone 4 Recall Price Tag at $1.5 Billion started by Michael Essany View original post
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