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Apple’s Jobs apologizes over iPhone price cut

Retail

Apple Inc. CEO Steve Jobs responded to customer dissatisfaction over the company cutting the price of its high-end iPhone by apologizing and offering iPhone buyers a $100 store credit toward any Apple product.

Website, Jobs said that while he believes Apple made the right move in lowering the price of its 8-gigabyte iPhone to $399 from $599, “we need to do a better job taking care of our early iPhone customers.” Jobs said the company received “hundreds of e-mails” from iPhone customers upset over the move. “Our early customers trusted us, and we must live up to that trust,” Jobs said. “And we must live up to that trust with our actions in moments like these.”

According to Jobs’ statement, customers who bought an iPhone from either Apple or AT&T Inc. will be eligible for a $100 credit they can use at either Apple’s retail or online store. Jobs’ statement said the credit would be available for customers not already receiving a rebate for the iPhone. Apple’s current purchase policies say that if the company lowers the price on an Apple-branded product within 14 days after purchase, a customer may request a refund of the difference between the purchase price and the reduced price. The request must be made within 14 days of the price reduction.

Jobs announced the iPhone price cut at an Apple event in San Francisco on Wednesday, in which the company also revamped its line of iPod digital music and video players. Jobs said that in addition to cutting the price of the 8GB iPhone, Apple would only sell the 4GB version of the device, which the company has also cut by $200, to $299, as long as current supplies are on hand. The move has put pressure on Apple’s stock, which fell more than 5% Wednesday and continued to trade down on Thursday. The shares closed trading Thursday down nearly 1.3% at $135.01. The price cut comes barely two months after the iPhone was released to long lines of customers, many of whom camped outside of Apple and AT&T stores for days in order to be the first buyers of one of the most highly anticipated technology products in recent history.

Andy Hargreaves, of Pacific Crest Securities said the company risked alienating its most loyal customers with the price cut. “These customers will likely remain loyal in the near term,” Hargreaves said in a report. “[But] further alienation of Apple’s core customer base could have negative financial implications over time.” Hargreaves holds an outperform rating and $175 price target on Apple’s stock.

At the Apple event, Jobs said the price cut was made in order to help set the company up for the end-of-the-year holiday shopping season, which is typically Apple’s busiest business period of the year. (marketwatch.com)

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