iPhone 4 Consumer Reports Verdict: Can't Recommend

SAN FRANCISCO, July 12 (Reuters)—Consumer Reports said it cannot recommend Apple's (NASDAQ:AAPL) iPhone 4 to buyers after tests confirmed the device's well-publicized reception glitches.

It added that that AT&T Inc (NYSE:T), the exclusive mobile phone carrier for the iPhone 4, was not necessarily the main culprit.

The influential nonprofit organization, which publishes guides on everything from cars to TVs, said in a report released on Monday that it also tested other phones—including the iPhone 3GS and Palm Pre—and found none had the signal-loss problems of Apple's latest iPhone.

The report was the latest blow to the iPhone 4, which sold 1.7 million units in its first three days on the market but has been plagued by complaints of poor reception. Many of the complaints involve a wraparound antenna whose signal strength is said to be affected if touched in a certain way.

Kaufman Bros analyst Shaw Wu said he was surprised by the stance that Consumer Reports took on the new iPhone. Wu noted that the group's recommendations are used as a guide by many consumers.

"Consumer Reports is a respected publication. This could have an impact on iPhone sales," Wu said.

Apple shares were down 1 percent at $257.06 on Monday afternoon on the Nasdaq.

The company has been sued by iPhone customers in at least three complaints related to antenna problems.

"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," contributor Mike Gikas said in a report on the Consumer Reports website.

"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,'" Gikas said.

Apple did not respond to a request for comment.

Gikas recommended covering the gap in the wraparound antenna with duct tape or some other non-conductive material.

Apple has said almost any cell phone will suffer a loss of signal if held in certain ways. It said later it had discovered a software glitch that overstates signal strength, though it did not directly address concerns about the antenna with that admission.

On the flip side, Consumer Reports said the iPhone scored high on other testing grounds such as battery life, sharp display and high-quality video camera.

However, Gikas said the signal problem was the reason the iPhone 4 would not be classified as a "recommended" device in its smartphone ratings.

"Apple needs to come out with a permanent—and free—fix to the antenna problem before we can recommend the iPhone4," said Gikas in his blog post on ConsumerReports.org.

(Reporting by Carolina Madrid and Gabriel Madway; editing by Edwin Chan, Matthew Lewis and Steve Orlofsky)  

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