Cost of an Apple Recall: It Depends
While most traders do not believe Apple will do a recall of the iPhone to address the antenna issues, a recall would not cause immense damage to the company, according to several analysts.
1) JP Morgan analyst Mark Moskowitz said yesterday that the cost of providing refurbished iPhones would be roughly $300 million ($150 per phone x 5 million phones sold), which would be a hit of about $0.38 to earnings.
2) RBC Capital analyst Mike Abramksky today estimates an outright recall with new phones would cost $900 million or up to $0.71 a share. That is a fraction of AAPL's $42 billion in cash.
However, Abramksy notes that each additional week Apple takes to resolve the issue could add $200 million to the tally.
However, there are other, perhaps more likely, scenarios: The cost of providing a simple case for free would be about $15 per customer ($45 million); the cost of a refurbished phone would be about $100 per customer ($300 million).
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