Analyst Claims 50% Chance Of A Free In-Store Fix For iPhone 4 Reception Problems

News | Sunday July 11 2010 2:08 AM | Comments (0) Tags: , , , , , , ,

In a note issued to clients on Thursday, Piper Jaffray analyst Gene Munster has deliberated upon the several possible solutions that Apple could announce during the press conference. While Munster has confided that he does not have any insider information in this regard, he has nevertheless narrowed down the three most likely alternatives.
Munster claims that there is a 50% likelihood for Apple to offer a free in-store fix that will cover the antenna band with a non-conductive coating. He also expects Apple to incorporate this coating or
on all the future models. Cupertino is however likely to see major financial implications by opting for this solution. Munster estimates the costs from this fix to wipe off close to 12% of Apple 's Q4 EPS. This is roughly equivalent to the sale of 3 million
units. Alternatively, Apple may recall all existing iPhones to render a ”
“. He estimates the costs in this case to reach $1 billion and consequently reduce Apple 's EPS for 2010 by nearly 7%.
This has been the most popular solution among iPhone 4 customers. Munster believes that there is a 40% chance for Apple to opt for this alternative. The financial implications are relatively lower at $180 million which is approximately 1% of Apple 's operating income for 2011.
Munster sees a 10% chance for Apple to simply explain the issues to the media without offering any fix. He however sees such a scenario unlikely.
With the new iPhone 4 having garnered a lot of negative press in recent weeks, Apple is very likely to offer solutions that will help the company retain its brand value. Munster writes:
“Ultimately, we believe Apple will manage these issues in a consumer-friendly way and maintain its pristine brand.”
We are eagerly looking forward to Apple 's press conference at 10 AM PST on Friday morning. Don't forget to tune in here to read the latest from Apple 's iPhone 4 press conference.

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