iPhone 4 Recall Could Cost Apple $1.5 Billion

If Apple were to issue a recall for the iPhone 4 it could cost the company up to $1.5 billion, according to Bernstein Research analyst Toni Sacconaghi.

Barrons reports that the Sacconaghi believes the time has come for Apple to “explicitly and constructively address the iPhone 4’s reception problems - ideally with an explanation for the root cause of the antenna issue, and a solution(s) for addressing it.”

An in-store fix would cost Apple approximately $75 a piece, or $450 million assuming 6 million units. A full recall could run $250 a phone, or an estimated $1.5 billion.


Sacconaghi thinks a more likely solution will be the issuance of free bumpers costing the company about a dollar each.

He says the bigger problem is “the emerging pattern of hubris that the company has displayed,” for example:
● Refusal to fully discuss Steve Jobs‘ health.
● Refusal to discuss plans for large cash position.
● Attack on Adobe Flash.
● Probe of lost iPhone, resulting in raid on a reporter’s home.
● Restrictions on app development.
● Dismissive stance on iPhone 4 reception problems to date.

“The worry is that collectively these issues may over time begin to impact consumer’s perceptions of Apple, undermining its enormous prevailing commercial success."

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