Free iPhone 4 cases will cost Apple $175 million

Apple said on Tuesday that the free cases for its iPhone 4 antenna issue will cost the company $175 million.

Apple announced the free cases at an emergency press conference held last week. On an earnings conference call with investors today, Apple revealed the cost of the free cases. Apple said that it plans to expense the cost of the cases which will result in $175 million in deferred revenue. The figure is an estimate that Apple is accounting for on its Q4 balance sheet. 

Prior to the iPhone 4 launch, customers who pre-ordered their device and received it a little early, began reporting widespread reception issues when holding the iPhone 4 with their left hand. Apple eventually responded to the reception reports and said it planned to issue a software fix. This software fix (iOS 4.0.1) corrected a bad algorithm for displaying signal bars but did not address the core issue of poor antenna performance. Apple was forced to hold an emergency press conference and promised a free case for every iPhone 4 user. Apple said it has sold 1.7 million units in its first weekend of sales.

Apple announced its financial results on Tuesday for the third quarter of 2010 ending June 26. Apple once again had a strong quarter and blew past Wall Street estimates. Apple's previous Q1 and Q2 2010 results were strong mainly thanks to iPhone sales. The iPad sales are extremely strong and nearly topped Mac sales for this quarter.

Image Credit: Dan Hendricks (Flickr)

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