Apple Inc Chief Executive Steve Jobs' offer of free phone cases mitigates the public relations damage the iPhone 4 antenna issue has caused, analysts said.
The problem with the antenna -- a software glitch that overstated network signal strength in the iPhone 4 -- hurt the U.S. technology giant's image as well as its stock, which is down 7 percent since June 28.
At a rare Apple press conference on Friday, Jobs rejected any suggestion the iPhone 4's design was flawed, but offered consumers free phone cases to address reception complaints.
We believe Apple accomplished its objective of addressing the iPhone 4 antenna issues to its customers and, more importantly, relieving the excitement levels and tension with the press, BMO Capital Markets analyst Keith Bachman wrote in a research report.
Most investors and analysts were not expecting a recall and that proved true.
While we expect the debate to continue, we believe the company's response should begin to lower the rampant criticism emanating from the media-driven frenzy, J.P. Morgan analyst Mark Moskowitz said in a note to clients.
However, Moskowitz called the free cases a band-aid for the problem and said a permanent fix was needed, either with this version of the iPhone or a later one.
Analysts said the focus will now shift to Apple's earnings performance, and they see only a minimal fallout of the antenna issue on Apple's profits.
BofA Merrill Lynch expects Apple's earnings per share to be hurt by 5 cents in its fiscal fourth quarter.
The company will report fiscal third-quarter results on Tuesday, July 20.
At the press conference, Jobs said reception issues were a problem shared by the entire smartphone industry, including Apple's rivals Research in Motion, Samsung Electronics and HTC Corp.
In response to Jobs' comments, RIM defended the BlackBerry's design and criticized Apple's approach to dealing with the iPhone 4's antenna issue.
Samsung said on Monday that it has received no significant complaints related to smartphone signal reception.
Apple shares were down 2 percent at $245.58 in Monday morning trade on Nasdaq.
(Reporting by S. John Tilak in Bangalore; Editing by Anne Pallivathuckal)