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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

Index Last Change % Change
Dow 16,351.38 293.03 1.82%
Nasdaq 4,749.98 113.87 2.46%
S&P 500 1,948.86 35.01 1.83%
Treasuries 2.19 0.02 0.97%
Data as of 5:52pm ET
Company Price Change % Change
Bank of America Corp... 15.85 0.32 2.06%
Apple Inc 112.34 4.62 4.29%
General Electric Co 24.57 0.69 2.89%
Alcoa Inc 9.32 0.10 1.08%
Netflix Inc 105.44 -0.35 -0.33%
Data as of 4:01pm ET
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