Not that big a deal, is their consensus. The market, naturally, ignores them.
On Monday, Consumer Reports decided it couldn’t recommend the iPhone 4. On Tuesday and Wednesday, analysts who track Apple (AAPL) offered clients their take on what it means for the company.
Morgan Stanley’s Katy Huberty saw it as a “PR problem that Apple needs to address to preserve the brand and loyal customer base.” Kaufman Bros.’ Shaw Wu noted that Apple still can’t build iPhone 4s fast enough to meet demand.
A Toyota-style product recall was seen as unlikely, despite chatter from a crisis management expert who handled the Monica Lewinsky affair for Bill Clinton, although RBC’s Mike Abramsky estimated that every week Apple waits adds another $200 million to its cost.
Several analysts suggested that offering users a free $29 Bumper would be a relatively painless solution. Piper Jaffray’s Gene Munster estimated the price of such a fix: $178.5 million, or 1% of Apple’s estimated operating income for fiscal 2011, something Apple — with $41.7 billion in the bank — could easily afford.
The market, of course, ignored the analysts’ advice. By Tuesday morning the stock had fallen $15.42 (6.3%) from Monday’s high, creating what some traders saw as buying opportunity in advance of next week’s earnings report. By the end of the day, shares had recovered some of the lost territory and closed at $251.80.
Below: Excerpts from the analysts’ reports.
Morgan Stanley’s Katy Huberty: “Antenna Concerns Need To Be Addressed”
Barclays Capital’s Ben Reitzes: “Get an iPhone Bumper”
BMO Capital’s Keith Bachman: “iPhone Disruptions”
a) Based on interviews with 25 AT&T store reps, we believe that demand remains strong and returns have been few [see chart], and b) based on Asian supply chain checks, we do not believe that Apple has made cuts to production levels. Moreover, even if Apple were to give away bumpers to completely eliminate this problem, the financial impact would be minimal.
Kaufman Bros.’ Shaw Wu: “Growing Antenna Attention Could Create Risk”
J.P. Morgan’s Mark Moskowitz: “Negative Review of iPhone 4 Turns Up the Heat on Apple”
Piper Jaffray’s Gene Munster: “iPhone 4 Issue Reaches Boiling Point”
Citigroup’s Richard Gardner: “Buy on weakness”
RBC Capital’s Mike Abramsky: “iPhone 4 Antenna Issues — Thoughts and Possibly Scenarios”
UPDATE: The outlier, judging from Barrons‘ report, is Bernstein’s Toni Sacconaghi, who told clients he sees a larger problem in what he calls an “emerging pattern of hubris” in the company’s approach to a long list of issues. These include Apple’s refusal to fully discuss Steve Jobs’s health, its attack on Adobe Flash, its restrictions on app developers, its aggressive probe of the lost iPhone prototype and, bizarrely, “its refusal to discuss plans for large cash position.”
Although Sacconaghi agrees that an iPhone 4 recall is “highly unlikely,” he priced out the cost: $1.5 billion.
- iPhone 4: The Consumer Reports fiasco
- Diagram: The iPhone 4’s lost bars
- How bad is the iPhone 4’s signal loss?
- The iPhone 4 Death Grip saga
[Follow Philip Elmer-DeWitt on Twitter @philiped]