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iPhone 4 Design Flaw Puts Apple Stock On Hold?

Monday, 12 Jul 2010 | 5:47 PM ET

Investors are growing more worried that a design flaw in the iPhone 4 could translate into a serious issue and drag down shares of Apple .

And jitters are growing after Consumer Reports said it will not recommend the new iPhone 4 to buyers after testing the device.

The report marked the latest blow for a device that sold 1.7 million units in three days, but which has been plagued by complaints about poor reception.

Market Buzzkill
Apple is hit after Consumer Reports news on its antenna, with Gene Munster, Piper Jaffray senior research analyst.

Many of the complaints involve a wraparound antenna that is said to reduce signal strength if touched in a certain way.

“When your finger or hand touches a spot on the phone’s lower left side — an easy thing, especially for lefties — the signal can significantly degrade enough to cause you to lose your connection altogether if you’re in an area with a weak signal,” says the Consumer Reports website.

“Due to this problem, we can’t recommend the iPhone 4.”

To make matters worse for Apple, the influential nonprofit organization said it tested many other phones — and found none had the signal-loss problems of the iPhone 4.

As bad as all that sounds, Gene Munster of Piper Jaffray doesn't think it's a game changer for Apple investors. He describes the dropped calls as a black eye but nothing more.

And despite these developments, “Apple can’t keep the iPhone 4 on the shelves,” he reminds.

”At the end of the day consumers are buying this phone for text, internet and email,” he adds. In other words, people don’t buy the iPhone 4 to make phone calls – instead it’s for the many other functions.

What’s the bottom line?

”I don’t expect this changes the trajectory of the gadget, “ Munster tells us.

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Trader disclosure: On July 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM)l Finerman Owns (WFC) Preferred; Finerman's Firm And Finerman Own (BBY); Terranova owns (GOOG), (AMZN), (MON), (APC), (GMCR), (MYL), (MRVL), (BAC), (ADI), (ADBE), (AKAM), (HES), (CVS), (AXP), (EMC), (ABT); Kelly Is Short (GS); Kelly Owns (BP) Puts; Najarian Owns (INTC) Call Spreads

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