By Neil Hughes

Published: 09:55 AM EST (06:55 AM PST)

Though reports have indicated Apple will not initiate a full recall of the iPhone 4 at its press conference today, some prominent Wall Street analysts believe Apple could institute a "voluntary" recall, or refund dissatisfied owners the full purchase price.

Reports from both The Wall Street Journal and The New York Times on Thursday indicated that Apple will not institute a full recall of the iPhone 4 at its press conference today, scheduled for 10 a.m. Pacific Time, 1 p.m. Eastern. The Times also suggested that the widely reported antenna issues with the iPhone 4 have been a longstanding problem with both the hardware and software found in all iPhones, and could be remedied with a software fix.

With a full product recall apparently off the table, Wall Street analysts weighed in at the last minute on Friday, to share what they think Apple will reveal at the press conference on its Cupertino, Calif., campus.

RBC Capital Markets

Analyst Mike Abramsky sees a voluntary recall as a likely option for Apple, particularly if the issue affects a specific set of serial numbers with the iPhone 4. In that scenario, only iPhone 4 buyers who qualify -- and only those who request a new handset -- would have their faulty hardware replaced. This would save Apple face, and money.

Abramsky sees Apple Chief Executive Steve Jobs today offering an apology to customers, and suggesting that users who think their hardware is affected can go to Apple's website and enter in their serial number. From there, users could opt to try out a free bumper to see if that resolves their issue, or if they prefer, they could exchange their device for a new iPhone 4.

In this scenario, Abramsky said, he could see Apple requesting users' contact information, to let them know when their updated handset can be shipped to them. Users will be able to exchange at no cost, and will receive a $50 gift certificate for their problem.

If there is a hardware fix, Abramsky said he believes Apple will say it began shipping the updated devices this week. This would ensure customers considering a purchase that their handset will not be affected.

He sees the total impact costing Apple between $131 million and $525 million, with anywhere from 400,000 to 1.5 million iPhone 4 replacements.



"Steve (Jobs) has to show Apple cares deeply about its customers," Abramsky said of today's press conference. "If he doesn't, the downside impact to the Apple brand -- already tarnished by this issue -- may be significant. Can Apple and Steve pull this off? My call is they will."

Gleacher & Company

Analyst Brian Marshall expects that Apple will make minor tweaks to future production of the iPhone 4, adding a nonconductive coating to avoid antenna issues with future models. He said Apple will likely offer both a verbal and monetary apology, in the form of a free bumper or $30 gift card.

But he expects the Steve Jobs-hosted event to focus on the fact that signal degradation issues are experienced by less than 1 percent of customers. He also sees Jobs as adopting a "humble approach" for today's press conference.

Marshall said dissatisfied customers will likely be allowed to return the iPhone 4 in exchange for the full purchase price. He also expects that there will be no change to production build plans, nor any reduction in consumer demand for the product.

Gleacher & Company has dubbed the method of holding the iPhone 4 to cause reception issues the "monkey grip." Marshall said that using this grip, he was able to "force our iPhone 4 into submission," using an "extremely specific (and painful) manner."



"We call it the 'monkey grip' because our experience shows that in order to effectively recreate the reported signal degradation issues, one's hand needs to be not only huge but flexible as well (similar to that of a monkey's)," Marshall wrote.

Kaufman Bros.

Shaw Wu, analyst with Kaufman Bros., said that although a recall is "unlikely," he could see a smaller exchange being offered by Apple. He said checks with sources have indicated that Apple is exploring both hardware and software fixes for the issue.

Those sources have said that Apple has considered minor manufacturing tweaks that will help insulate the "gap" on the lower left side of the iPhone 4. The company could also utilize a different metal composite to provide better insulation.

"While all metals conduct electricity and radio waves to a degree, there are different grades of conductivity," he said.

On the software side, Apple is also allegedly working on better antenna algorithms. Sources indicated to Wu that Apple is "furiously working" to improve them and account for different human body shapes and water levels. Those sources also said that the math is "complex but not insurmountable," and "may take some time to write."

"We don't claim to be material science or antenna engineering experts, but from our conversations with sources familiar with the situation, these fixes will make iPhone 4 less prone to interference, and hopefully put an end to the bad rap AAPL has been taking," Wu wrote. "Fortunately, our checks indicate the 'death grip' has impacted only a small fraction of users and is not as dramatic as the media frenzy has made it out to be."

The analyst said he expects that Apple will announce that another software fix for the iPhone 4 is forthcoming. He also reiterated his believe that handing out free bumpers would be a simple and cost effective way for Apple to appease customers.