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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