Apple vs Samsung: War Continues - Analyst Blog
March 05 2012 - 4:00AM
Zacks
Apple Inc. (AAPL)
and Samsung’s court battles are nothing new. Both the companies
have been filing patent infringement cases against each other in
almost every continent in which they are present. In the latest
development, two patent infringement cases brought on by Apple and
Samsung against each other were dismissed by a regional court in
Mannheim, Germany.
Apple’s claim that Samsung has
infringed its mobile devices’ ‘slide-to-unlock technology’ was
dismissed by the German court. Samsung, in its defense, argued that
its slide to unlock technology was different from that of Apple’s
in terms of "gestures of any path between start and target".
Separately, Samsung’s claim that
Apple was violating a certain 3G wireless patent held by Samsung
was also dismissed. However, Samsung is expected to appeal to a
higher court in Karlsruhe, Germany, against the dismissal.
Interestingly, very recently the
same court in Karlsruhe, Germany, ruled in favor of Apple in the
patent infringement case lodged by Motorola Mobility
Holdings Inc. (MMI). The patent in question was related to
3G wireless networking standards that threatened to disrupt sales
of Apple’s iconic iPhones and iPads in the country.
Apple has been pretty aggressive in
protecting its intellectual property and has been using court rooms
to counter competition in various countries. Notwithstanding a few
failures, the company has received success in many of the patent
litigation cases that it has filed against Samsung and other fellow
competitors such as HTC, Motorola Mobility and Microsoft
Corp. (MSFT).
We believe that Apple’s legal
tussles will continue as competition heats up in the smartphone and
tablet space. This will increase legal expenses and 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, popular apps, the recently launched iCloud and
iPhone 4S, and the upcoming update of iPad and Apple TV, and loyal
customer base. With a solid balance sheet and robust
revenues, we expect Apple to outperform its peers in the long run.
Moreover, we also expect Apple to succeed in developing countries
due to the growing affluence of the middle class in key
markets.
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
MOTOROLA MOBLTY (MMI): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
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