German Court Rules in Favor of Apple - Analyst Blog
February 28 2012 - 4:00AM
Zacks
A higher regional court in Karlsruhe, Germany, ruled in favor of
Apple Inc. (AAPL) in the patent infringement case
lodged by Motorola Mobility Holdings Inc. (MMI).
The patent in question is related to 3G wireless networking
standards that threatened to disrupt sales of Apple’s iconic
iPhones and iPads in the country.
Earlier in December 2011, Motorola had won a temporary
injunction against Apple in Mannheim court that forced Apple to
stop the sale of iPhone 3G and iPhone 4 models and iPads from its
online stores.
Though the recent ruling in Apple’s favor is of a temporary
nature, it nonetheless shows Apple’s mettle in the defending of its
intellectual rights in a court of law. We believe that these
victories are important for Apple because iPhones and iPads are
best-selling devices that have been a major revenue contributor for
the company over the last few years. Apple surely will be cheering
its victories, as bans on the latest iPhone and iPad sales would
have resulted in significant revenue loss.
Over the last 12 months, Apple has been highly vocal about
saving its intellectual property from misuse and violations. The
company has been aggressive in filing lawsuits against other
handset makers such as Samsung and HTC, in order to protect its
patents. Apple has accused these manufacturers of blatantly copying
not only its iPhone and iPad designs, but also its technology.
Apple has been in constant war against Google
Inc.’s (GOOG) Android-based smartphones. Through Motorola
Mobility, Google has acquired a large number of patents that makes
its OS an even stronger offering.
In such a scenario, an injunction against Apple on the ground of
violation of technology patents would not only have hurt customer
sentiments, but would also have made it difficult for Apple to
justify its own patent infringement claims in other lawsuits.
We believe that Apple will remain entangled with further
lawsuits, as competition heats up in the mobile and tablet space.
We also believe that increasing legal expenses will hurt Apple’s
operating profit going forward. Additionally, the impending
lawsuits in different countries will remain an overhang on the
stock going forward.
Despite these factors, we believe that Apple remains the biggest
growth story based on its superior product pipeline, Apps, the
recently launched iCloud and iPhone 4S and the upcoming update of
iPad and Apple TV. Apple is also well positioned to gain from a
loyal customer base and international expansion going forward, in
our view.
We maintain our Neutral recommendation over the long term (6-12
months). Currently, Apple has a Zacks #1 Rank, which implies a
Strong Buy rating in the near term.
APPLE INC (AAPL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
MOTOROLA MOBLTY (MMI): Free Stock Analysis Report
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