The jury has ruled in favor of Apple Inc. (NASDAQ:AAPL) versus Samsung Electronics. Many analysts are calling this a huge victory for Apple Inc. (NASDAQ:AAPL). Dozens of sell-side reports are out today noting the big victory and compensation, which Apple Inc. (NASDAQ:AAPL) will receive from Samsung.
Topeka Capital markets put a report out titled, ‘A Sweet “Thermonuclear” Victory for Apple…’
Topeka states: On Friday, jurors in the Apple vs. Samsung (005930 KS-KRW1,275,000: NR) case found Samsung guilty of infringing on multiple Apple patents surrounding design and software. The jury awarded Apple $1.05 billion in damages (vs. $2.5 billion that Apple requested). More importantly, we believe this verdict enhances the Apple brand as “the innovator” in the smartphone and tablet markets at the expense of Samsung Electronics that some will now view as the “imitator”, while also providing a strong disincentive for future “copying” of Apple products.
Baird Research put out a positive report on Apple Inc. (NASDAQ:AAPL), with a slightly toned down title, ‘Apple Scores Significant Patent Victor’
They summed up the case as follows; Last Friday afternoon, a jury awarded Apple a significant victory against Samsung and the Android platform, finding that Samsung “willfully” infringed on several key patents, including Apple’s iPhone design. In addition to possible injunctions of current Samsung products, this could force other Android OEMs to consider work-arounds or design changes, possibly enhancing Apple’s competitive positioning in the near term.
(NASDAQ:AAPL) will receive from Samsung. The market also likes the news. Shares of Apple are up 2%, while shares of Samsung are down 6%.
However, the future is always uncertain as investors learn the hard way many times. Some analysts are urging caution regarding the Apple victory over Samsung.
BMO capital markets cautiously observes potential problems down the road for Apple Inc. (NASDAQ:AAPL). The problems and the hype include:
Our View:
The $1 billion in awards would add approximately 1% to Apple’s cash balance. (yet the stock is up billions in terms of market cap today)
If Apple is able to obtain injunction so that Samsung is not able to sell devices in the US, Apple could see some share shift. Each point of share in the US smartphone market is about 1 million units annually, and each million units would add about $600 million in revenues, $300 million in gross profit dollars, and $0.30 in EPS. Not all Samsung devices will be impacted, and some of the most recent devices likely will not be impacted. Hence, actual share impact is difficult to judge. It would appear in this case the market over-reacted with investors dumping Samsung shares.
Samsung will appeal the ruling, so we don’t think the final chapter has been
written.
We think it will be harder for Apple to win a similar ruling in international markets, though similar cases are pending in Europe and other regions. We note that a South Korean court had a different ruling, which determined that Samsung did not copy the design of Apple’s iPhone and that Apple infringed on Samsung’s wireless technology.
Many have already stated that the courts were biased in favor of Apple.
We think it will be important for Apple not to appear to be a bully to consumers. We would not be surprised to see the press take the view that the verdict lessons competition, and that Apple will need to promote the view that Apple was just protecting its innovation and IP.
This is an important point. Apple is starting to get some bad press over work conditions in Foxconn factories. Apple is involved in various lawsuits with Google and other big companies. While the vast majority of people view Apple favourably, consumers tend to not like ‘bullies.’
The court ruled that Samsung’s Galaxy tablets did not infringe on the industrial design of the tablet computer, but infringed on other Apple patents.
It is important for investors in both Samsung and Apple to be cognizant of the points, which BMO points out.
Disclosure: No positions
