Apple Inc.'s new iPhone is getting a lot of buzz these days, just not the kind the company is used to.
Consumer Reports magazine on Monday said it could not recommend the phone because of "a design flaw" in its antenna and questioned Apple's explanation for some devices displaying weak signal strength and even dropping calls.
It was the first time that the magazine, known for independent testing of consumer products, did not endorse an iPhone since the original model was released in 2007.
"Our findings call into question the recent claim by Apple that the iPhone 4's signal-strength issues were largely an optical illusion caused by faulty software," Mike Gikas, a Consumer Reports writer, said in a blog post that detailed the test results.
"It's a wonderful phone with a terrible flaw," Gikas said in a telephone interview.
The iPhone, which starts at $199 with a two-year service contract, is one of Apple's biggest moneymakers. The company said it sold 1.7 million units in the first three days of its release.
But some users immediately complained that the signal strength was weakened when the user's finger covered a certain spot on the phone's frame.
Earlier this month, Apple said it was "stunned" to discover that the "dramatic drop in bars" was largely the result of a long-standing software bug.
The software glitch causes the phone to display more reception bars than it is actually getting — creating the illusion of a stronger signal, Apple said, adding that it would deliver a software fix that would display the bars more accurately.
Apple's handling of the antenna revelations have been "uncharacteristically sloppy," said Andy Hargreaves, an analyst at Pacific Crest Securities.
Among the company's widely criticized moves was an initial recommendation that iPhone owners avoid holding the phone in a way that would affect its signal, or buy a case that covers the problematic area.
The company's work-in-progress response "points out how much they were caught off guard by this," Hargreaves said. "And maybe even how little they really understood the depth or breadth of the problem."
Wall Street analysts have generally said they do not expect the antenna issue to affect sales of the iPhone, believing the problem could be easily addressed.
But, Hargreaves said, "if they're not able to improve the issue through software, it certainly could be meaningful [to investors] a quarter or two down the road."
Apple's stock price dropped less than 1% by the closing bell and regained some of the loss in after-hours trading.
The company did not reply to requests for comment.
Recommendations by Consumer Reports have bolstered or derailed products because of the publication's influence on consumer purchases.
In April, the magazine issued a rare blanket warning urging drivers not to buy the 2010 model year Lexus GX 460 SUV after discovering a glitch in its stability-control system while testing the vehicle for a review.
Toyota Motor Corp., which owns Lexus, temporarily pulled the SUV from dealerships while it researched the problem and eventually recalled the vehicle to fix what the magazine engineers had uncovered.
Gikas said Consumer Reports would reevaluate the iPhone 4 if and when Apple offered a solution that didn't require users to pay anything extra — or hold the phone differently.
"You can't just suggest people use their right hands or buy an aftermarket product," Gikas said. "You have to fix it yourself."
Consumer Reports offered a temporary workaround: Cover the spot in question with a piece of tape.
"If you want an iPhone that works well without a masking-tape fix, we continue to recommend an older model, the 3G S," Gikas wrote in the blog post. "It may not be pretty, but it works."
Times staff writer Jerry Hirsch contributed to this report.