) recently received a favorable ruling against its arch rival
Samsung, after a U.S. jury ordered the South Korean company to
pay $290.0 million as damages to the iPhone maker. Apple now owes
more than $900.0 million to Samsung.
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In a 2012 verdict, 26 Samsung devices were found guilty of
infringing Apple patents and the company was asked to pay $1.05
billion as damages by the then jury. However, U.S. District Judge
Lucy Koh upheld approximately $640.0 million of that verdict and
ordered a retrial, citing errors in calculating damages on 13
The retrial held in San Jose, Calif. federal court recalculated
the damages and awarded $290.0 million to Apple, much less than
the original penalty. This was lower than Apple"s demand of
$380.0 million, but much higher than Samsung's estimated figure
of $52.0 million.
This is the second consecutive win for the company within a short
span of time. On Nov 18, the U.S. Court of Appeals ruled that
Judge Lucy Koh should reconsider Apple's request for a U.S. ban
on Samsung products that were found guilty of infringing patents.
Last December, the U.S. Judge had denied Apple's request for a
ban on 26 Samsung products. The appeals court ruled that out of
the 6 infringed patents, 3 qualified for calling a ban on Samsung
However, the legal fight between the two companies doesn't end
here, as Samsung plans to challenge the retrial verdict.
Moreover, both Apple and Samsung are scheduled to meet in court
in Mar 2014 in a new trial for examining more recent smartphones
that include iPhone 5 and Galaxy S3.
Although these are great moral victories for the iPhone maker,
they do not provide significant competitive benefit apart from
the penalty. The recent legal victories are related to products
that Samsung does not sell anymore.
Apple is facing significant competition in most of the markets
) Android operating system. The company continues to lag Samsung
in worldwide smartphone shipment. As per data available from IDC,
Apple had 13.0% market share compared with Samsung's 31.0% at the
end of the third quarter of 2013.
Despite a surge in iPhone unit sales (up 26.0% year over year),
Apple's fourth quarter result has failed to impress due to
declining gross margins and lower-than-expected U.S. revenues.
Moreover, lack of innovative products has been the major factor
negatively affecting Apple's growth trajectory in recent times.
The significant decline in revenues in the U.S and Rest of Asia
suggests market share loss to low cost smartphones and tablets
produced by Samsung, HTC, LG, Huawei and
). Besides Samsung, we expect Apple to face stiff competition
) in the U.S. smartphone market going forward.
Nevertheless, we believe that the refreshed product line-up will
boost top-line growth in the near term. Additionally, the
shareholder friendly moves such as higher dividend payment and
expanded share buyback are expected to drive the stock going
Currently, Apple has a Zacks Rank #3 (Hold).