Consumer Reports pans the iPhone 4, AAPL stock tanks, recall inevitable?

Consumer Reports has said that it "can't recommend" the iPhone 4 due to the antenna flaw and analysts are starting to follow suit. PR experts say that Apple will be forced to recall the device.

One of the most mainstream of the mainstream media has issued a scathing indictment of the iPhone 4 and it appears to be putting pressure on AAPL shares as the story gets picked up across the globe.

Consumer reports today posted an article stating that it "cannot recommend" the iPhone 4 because of "a problem with its reception."

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. Due to this problem, we can't recommend the iPhone 4.

Gulp.

It looks like CR (and Ma and Pa Jed) just discovered what most reviewers caught on June 24, and what Apple's been busy blaming everyone else for: Apple's iPhone 4 antenna design is fatally flawed.

And it gets worse:

Our findings call into question the recent claim by Apple that the iPhone 4's signal-strength issues were largely an optical illusion caused by faulty software that "mistakenly displays 2 more bars than it should for a given signal strength."

...and worse still:

The tests also indicate that AT&T's network might not be the primary suspect in the iPhone 4's much-reported signal woes.

Double gulp.

After the CR piece hit late yesterday Bloomberg published a note about it at 10am today sending AAPL shares into a nose dive on the NASDAQ. As I write this AAPL shares are down $7, or around 2.9%.

It appears that no one's amused by Apple's casual reaction to what's apparently a fatal flaw in its golden goose - including investors.

Now, Apple's option of giving iPhone 4 owners a free bumper case (which it didn't do, mind you) looks trivial compared to the possible recall and replacement of upwards of 2 million defective iPhone 4 units. Which is bound to happen according to PR experts interviewed by Cult Of Mac.

“Apple will be forced to do a recall of this product,” said Professor Matthew Seeger, an expert in crisis communication. “It’s critically important. The brand image is the most important thing Apple has. This is potentially devastating.”

They go on to say that the iPhone 4 reception issue presents "a Toyota-style PR crisis for Apple, and the company must respond with a more meaningful fix than a software patch."

Apple needs to issue a speedy and effective response before this turns from a Toyota-style PR crisis, into a BP-style PR crisis.

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