LOS ANGELES/SAN FRANCISCO: Shares of Apple Inc slid more than 4 per cent on Tuesday after a poor review for its iPhone 4 from an influential consumer guide underpinned mounting complaints about the hot-selling device’s reception and spurred speculation about a product recall.
Analysts thought a recall unlikely but said the world’s most valuable tech company needs to move quickly to avert longer-term damage to its widely respected brand, which allows it to charge a premium for products like the iPad and iPod. The stock should recover on Wednesday, some said.
Consumer Reports said that it could not recommend the iPhone 4 — which sold 1.7 million units worldwide in its first three days — after its tests confirmed concerns about signal loss when the device is held in a certain way.
That report spurred widespread discussion on Tuesday, including on popular tech site Cnet and multiple blogs, about the possibility of an iPhone 4 recall: an unheard-of event for a company lauded by investors and tech aficionados for its marketing savvy and product quality.
Apple, which has called the iPhone 4’s June debut its most successful product launch ever, has not responded to the widely watched nonprofit organization’s report or to the recall talk.
The company has said all cellphones suffer some signal loss when cradled in different ways, and suggested that a software glitch might have misled users by overstating signal strength.
Hudson Square Research analyst Daniel Ernst pointed to speculation that Consumer Reports’ article might induce a recall. But some spotted a buying opportunity as Apple’s stock bounces off Tuesday’s low.
“There’s nothing to recall. There’s people lining up in droves to buy this phone,” said Gleacher & Co analyst Brian Marshall. He said he could not replicate the antenna problem on the iPhone 4.
Apple shares dipped below their 50-day moving average price of $256.26, sliding as much as 4.2 per cent to $246.43. They pared losses to trade 2 per cent lower at $252.19 Tuesday afternoon, as the Nasdaq gained 1.7 per cent.
Shares of Research in Motion, which makes the rival Blackberry, climbed 3.4 per cent to $55.62. Google Inc, whose Android operating system for smartphones is gaining traction on multiple devices, also rose, by more than 3 per cent to $490.35, along with tech stocks overall.
Analysts said Apple needs to take quick action to avert any lasting damage to its reputation for quality products — an image honed by iconic gadgets such as the iPod and iPad — though they did not see sales being hurt for now.
“They need to provide an actual fix — not a bumper fix — so that the product performs as it should,” said Ashok Kumar at Rodman & Renshaw. “Apple should have taken a higher road when addressing the design flaw, instead of taking the hard-line stance that they did.”
“This is not a Toyota problem, but it is a problem that Apple needs to address head-on,” he said, referring to the Japanese automaker’s global recalls of more than 10 million vehicles since late last year.