Apple: Leaked iPhone 'immensely damaging' to profit

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Apple said the theft and leak of its new iPhone prototype will have a "huge" negative effect on the company's earnings.

According to recently released court documents, Apple attorney George Riley told a detective in the San Mateo County Sheriff's Office that the leaked images of the phone were "immensely damaging" to the company.

"By publishing details about the phone and its features ... people that would have otherwise purchased a currently existing Apple product would wait for the next item to be released, thereby hurting overall sales and negatively [a]ffecting Apple's earnings," Riley said, according to the detective's affidavit.

The detective said Riley could not estimate exactly how much of a financial hit Apple would take from the incident, but he believed it would be 'huge.'"

Apple demanded an investigation after tech blog Gizmodo bought the stolen iPhone and posted photos of it online last month. On Friday, a San Mateo, Calif., judge ordered documents related to that investigation be released.

Apple did not immediately return requests for comment, but Apple analysts were dismissive of the company's damage assessment.

"It's a bunch of legalese and B.S. from lawyers," said Kevin Hunt, analysts and Hapoalim Securities. "Everyone knew a new iPhone was coming."

Hunt said that Steve Jobs' unveiling of iPhone OS 4.0 in early April -- a week before Gizmodo's leak -- was a big hint that the next iPhone was on its way. He also said Jobs' OS 4.0 run-through served as a better preview for the new iPhone's capabilities, since the images of the new phone didn't say much about what it could do.

Another analyst noted that both of the previous iPhone updates have been introduced at Apple's Worldwide Developers Conference, which takes place in the early summer. This year's WWDC conference is scheduled for June 7, so there shouldn't have been much surprise that a new iPhone would be on its way soon.

"It's a really tenuous argument from Apple, because anyone who follows its introduction behavior knows that new iPhones come in the early summer," said Charles Wolf, analyst at Needham & Co. "This is stricly corporate speak, directed towards creating some action against this kid from Gizmodo."

Investors also appeared to shrug off the attorney's comments -- Apple's (AAPL, Fortune 500) shares rose nearly 1% on Monday. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play

Search for Jobs

Index Last Change % Change
Dow 17,826.30 -279.47 -1.54%
Nasdaq 4,931.82 -75.98 -1.52%
S&P 500 2,081.18 -23.81 -1.13%
Treasuries 1.85 -0.03 -1.49%
Data as of 7:11pm ET
Company Price Change % Change
Bank of America Corp... 15.56 -0.23 -1.46%
General Electric Co 27.25 -0.03 -0.11%
Apple Inc 124.75 -1.42 -1.13%
Comcast Corp 58.42 -1.25 -2.09%
Microsoft Corp 41.62 -0.54 -1.29%
Data as of Apr 17
Sponsors

Sections

Comcast and Time Warner Cable representatives will sit down with Justice Department officials this week amid intense scrutiny of the proposed cable company merger. More

The U.K. election on May 7 is arguably the most influential in a generation. Nina dos Santos explains why the outcome of this vote could disrupt economies around the world. More

The Smokio e-cigarette pairs with an app on your phone to keep track of how much you smoke, and how much money you've saved by not buying tobacco cigarettes. More

The home of some of the most iconic toys has teamed up with a crowdsourcing platform for inventors to find the next great toys. More

Approved-tymkiwc
dgoldman.ctymkiw