Apple Shares Take a Hit From Consumer Reports Review

By Ian Bell July 13, 2010

Shares of Apple Inc slid more than 3 percent on Tuesday after a poor review for its iPhone 4 from an influential consumer guide underpinned mounting complaints about the hot-selling device’s antenna and reception.

Consumer Reports said on Monday 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.

The widely watched nonprofit organization said AT&T Inc, the exclusive mobile phone carrier for the iPhone 4, was not necessarily the main culprit.

Apple shares dipped below their 50-day moving average price of $256.26, sliding as much as 4.2 percent to $246.43. They later bounced back a tad to stand 2.9 percent lower at about $250, as the Nasdaq gained 1.7 percent.

Apple was not immediately available for comment.

JP Morgan warned that reports of wireless reception problems on the smartphone, which competes with Research in Motion’s Blackberry and Palm’s Pre, may affect demand.

“Consumer Reports is a well respected product reviewer, and the report should turn up the heat on Apple,” analyst Mark Moskowitz said in a client note. “Concerns around iPhone 4 reception do not appear to be impacting demand, but we think there are risks when a well respected product rating agency such as Consumer Reports issues an unfavorable report.

“We continue to expect a fix from Apple, whether the solution is software or hardware-related.”

Consumer Reports, which publishes guides on everything from cars to TVs, said in its Monday report that it had also tested other phones — including the iPhone 3GS and Pre — and found none had the signal-loss problems of Apple’s latest iPhone.

The report was the latest blow to the iPhone 4, which has been plagued by complaints about poor reception. Many of the complaints involve a wraparound antenna whose signal strength is said to be affected if the device is touched in a certain way.

Apple has been sued by iPhone customers in at least three complaints related to antenna problems.

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