Apple Mum On Fix, Faces New Drama

NEW YORK ( TheStreet) -- Apple's ( AAPL) love for its customers and its engineering prowess don't exactly add up.

Apple chief Steve Jobs offered free bumpers and refunds to unhappy customers, but he failed to offer an apology and a fix for the antenna problem that he portrayed as an industry-wide challenge.

Any hopes that this ridiculous spat will go away soon were dashed Friday.
Apple

Asked during his invite-only press conference if there were any changes to the antenna in the works, Jobs gave a definitive "who knows?"

"We're still working on this -- we're happy with the design," said Jobs, according to gdgt.com blogger Ryan Block. "Maybe our wizards in the antenna lab will come up with something better. But looking at the data, we don't think we have a problem."

That non-answer however, seemed to conflict with at least one account of Apple's antenna redesign effort. According to Rodman Renshaw analyst Ashok Kumar, Apple has instituted an internal fix to help insulate iPhone 4 antennas from signal interference.

But with no mention of a fix or recall, Apple faces a prickly problem: How do you address all the defective phones in the market as improved phones start rolling off the assembly line?

Presumably, customers who don't want bumpers may at some point feel entitled to a new phone that comes without the antenna glitch.

Wasting no time, Consumer Reports, which called out Apple on the antenna problem earlier, came out swinging Friday, calling the bumper offer "nice," but incomplete.

"Consumers deserve answers and fairness," Consumer Reports said in a statement. "Providing free bumpers and cases is a good first step toward Apple identifying and finding a solution for the signal-loss problem of the iPhone 4."

Apple has denied "Antennagate" accusations that were reported by Bloomberg Thursday. According to Bloomberg, Apple knew about the antenna design defects well before it went ahead with the product.

Apple certainly doesn't want it to look like it knowingly sold 3 million defective phones before it decided to fix a problem.

"They achieved their primary goal and protected their reputation," said Kumar. "And from an investor's perspective, the cost of the bumpers is inconsequential."

Unfortunately for Apple, the iPhone 4 antenna drama isn't likely to die down anytime soon. "It needn't have come down to this. They could have addressed the problem early on," said Kumar. "This will probably be an issue that is either solved in the market or possibly in court."

The antenna woes certainly haven't exactly helped Apple's stock, which is now down 11% from its all-time high of $279 just a month ago.

--Written by Scott Moritz in New York.

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