The patent fight between
) and Samsung intensified with the former seeking to add six more
products of the South Korean company to its patent infringement
lawsuit. The products in question include Samsung Galaxy S III,
which has the latest "Jelly Bean" Android 4.1 operating system
). The other products are Galaxy Note II, Galaxy Tab 8.9 Wi-Fi,
Galaxy Tab 2 10.1, Rugby Pro and Galaxy S III mini.
Samsung's Galaxy S III and the Galaxy Note II have been in
demand this holiday season. Samsung continued to expand its
market share in the overall mobile phone as well as smartphone
markets, based on its diversified product portfolio that caters
to every income group.
According to IDC, Samsung widened its lead in the third
quarter of 2012 with a total market share of 31.3%, which
expanded from 22.7% in the year-ago period. During the same
period, Apple's market share climbed from 13.8% to 15.0%.
Moreover, in terms of units shipped, Samsung recorded a
year-over-year increase of 100.4% compared to Apple's 57.3%.
Thus, Apple is eager to reclaim its position as the top
smartphone vendor and is investing its resources to restrict
Samsung's progress. Apple has dragged Samsung to court by filing
a number of design-related patent lawsuits. On the other hand,
Samsung also alleged that Apple infringed upon certain wireless
and feature-related patents. Samsung filed a patent infringement
case against Apple's iPhone, iPad mini and iPod Touch 5.
Recently, a U.S. federal judge had ordered the iPhone maker to
produce the details of its settlement terms with HTC. This order
will help Samsung determine if Apple's claims for "irreparable
harm" could be thwarted. This is apparently what Samsung needs to
prevent the injunction that could ban its devices in the
In August this year, the iPhone maker had gained a major
advantage over its Korean counterpart by winning a $1.05 billion
patent-infringement verdict. Now, in the upcoming December
hearing, U.S. District Judge Lucy H. Koh will preside over
Apple's claims to permanently ban Samsung smartphones and Galaxy
10.1 tablets from the U.S. market. The judge will also consider
Samsung's allegations of juror misconduct.
We believe that the impending lawsuits will act as a headwind
for the company. Moreover, increasing product-related costs and
supply chain constraints may hurt profitability going
However, Apple's niche products, Apps, iCloud and loyal
customer base are the long-term positives. Apple's international
expansions in developing nations should be a positive catalyst.
Moreover, the recent shareholder-friendly moves, such as dividend
payment and share buyback, are expected to drive the stock going
Currently, Apple has a Zacks #3 Rank, which implies a Hold
rating in the near term.
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