Gene Munster Defends Apple (AAPL) on iPhone 4 Black Eye

Long-time Apple (Nasdaq: AAPL) bull Gene Munster from Piper Jaffray has come out in defense of the stock mid-day as selling in the beloved tech giant has accelerated on fears of an iPhone 4 recall as complaints continue.

Munster reminds investors not to lose site of the forest through the trees.

He said the iPhone 4 hardware antenna issue won't impact their unit estimates, but a potential fix could impact operating income by 1%. "Ultimately we believe this PR black eye takes away some near-term upside potential to our iPhone estimates, but it does not change the long-term trajectory of the iPhone," Muster said.

The reality of the matter, Muster said, is "this problem periodically affects 25% of iPhone 4 users given the fix is easy (a case for the iPhone), and 75% of customers choose to use a case anyway."

One fix, according to Munster, is for Apple to give away Bumper cases it currently sells for $29. "Assuming 85% of all iPhones sold over the next year are iPhone 4s and Apple gives a Bumper away to every iPhone 4 customer, we estimate the company would give away 36m cases at a $5 cost per case for a total cost of $178.5m," Muster notes.

A second is option, according to Munster, is for Apple to do nothing, with only 25% iPhone users periodically affected by the issue.

The third option is a recall. Munster sees this as a "highly unlikely scenario" as the issue is completely resolved with a case, which is a significantly less expensive.

The firm maintained their Overweight rating and $351 price target on Apple.

Shares of Apple are down 2.8 percent today to $250, while the market is up 1.5 percent.

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