Shares of Apple Inc slid more than 4 per cent on Tuesday after a poor review for its iPhone 4 from an influential consumer guide underpinned mounting complaints about the hot-selling device's reception.
Consumer Reports said on Monday it could not recommend the iPhone 4 - which sold 1.7 million units worldwide in its first three days - after its tests confirmed concerns about signal loss when the device is held in a certain way.
Apple, which has called the iPhone 4's June debut its most successful product launch ever, has not responded to the widely watched nonprofit organization's report. The company has said all cellphones suffer some signal loss when cradled in different ways, and suggested that a software glitch might have misled users by overstating signal strength.
Apple shares dipped below their 50-day moving average price of $256.26 (U.S.), sliding as much as 4.2 per cent to $246.43. They later bounced back a tad to stand 2.9 per cent lower at about $250, as the Nasdaq gained 1.7 per cent.
Shares of Research in Motion , which makes the rival Blackberry, climbed 3.5 per cent to $55.68 in midday trading, though tech stocks were up overall on Tuesday.
Analysts said Apple now needs to take quick action to avert any lasting damage to its reputation for quality products - an image honed by iconic gadgets such as the iPod and iPad - though they did not see sales hurt for now.
"They need to provide an actual fix - not a bumper fix - so that the product performs as it should," said Ashok Kumar at Rodman & Renshaw. "Apple should have taken a higher road when addressing the design flaw, instead of taking the hard-line stance that they did."
"This is not a Toyota problem, but it is a problem that Apple needs to address head-on."
Apple has been sued by iPhone customers in at least three complaints related to antenna problems.