Apple ends down after offering free iPhone cases
CEO Steve Jobs says the company is 'not perfect' and says the iPhone 4 is the company's best product. With video updates.
Updated at 4:40 p.m. ET
Shares of Apple (AAPL) closed down $1.55, or 0.6%, to $249.90 today after the company offered a free "bumper," or case, for iPhone 4 customers as a result of the device's reception problems.
The bumper solution is the cheapest for Apple, analysts said, costing the company about $45 million. The offer will be available until Sept. 30.
The stock had initially moved higher after CEO Steve Jobs made the announcement of the case offer, rising 1%, after being down all morning. The stock was down as much as 1.2% earlier in the session.
The iPhone mess prompted traders to sell Apple stock all week -- the stock which is down 3.7% for the week, and it has lost 7.7% since the iPhone 4 launched on June 24. The stock hit an all-time high of $274.07 on June 18, 2010, just before the iPhone was released.
Jobs kicked off the company's iPhone 4 press conference today by saying that the company is "not perfect" and that its "phones aren't perfect."
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Jobs talked for 15 minutes about the reception problems with the iPhone 4 and then mentioned rivals' smart phones and said that they, too, have reception problems.
He also said that one-half of 1% of iPhone users, or about 15,000 people, complained about reception issues. He also said that the iPhone 4 drops more calls than its predecessor, the iPhone 3GS, but that the return rate of the iPhone 4 is one-third that of the 3GS.
Jobs said the iPhone 4 is probably the best product ever made at Apple, and he said that if consumers don't want the iPhone 4, they don't have to buy it.
He said that the company cares about every user and that the company will not rest until it gets to the bottom of every customer's complaints.
Analysts did not expect a recall from Apple, but many were concerned about extended backlash from the issue.
"A real risk is if the press keeps talking about this issue, iPhone 4 growth could slow," BMO Capital Markets analyst Keith Bachman wrote in a research note.
Another expert wanted an apology. "People love Apple. All they need is an excuse to come back. An apology is the way to go," Charlie Wolf, an analyst at Needham & Co., told Bloomberg News before the press conference.
The iPhone's debut was hugely successful. Apple sold 1.7 million phones in the first three days, making the device the fastest-selling in company history. But then users started to have problems with dropped calls when they held their iPhones a certain way.
At first, Jobs simply told users to buy a case for the phone or hold it a different way, dismissing the criticism. But then Apple publicly apologized on July 2, saying that the problem with the phone was not the antenna but rather a bad formula to estimate signal strength.
Consumer Reports on Monday said it could not recommend the product.
The latest in the iPhone debacle came Thursday after published reports that Apple engineers and executives knew of the flaws associated with the new antenna design in the early stages of the iPhone's development but that Jobs liked the design so much that he wanted the company to move forward in developing the device.
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