Recently, Motorola Mobility Inc. ( MMI ) received a favorable ruling from the court in Manheim, Germany regarding infringement of its GPRS technology. Earlier, Motorola Mobility filed a lawsuit against Apple Inc 's ( AAPL ) Ireland-based sales company Apple Sales International alleging violation of the GPRS technology through the sale of iPad 3G and iPhone 4.
The present ruling will force Apple to stop selling the two popular devices in Germany and can also induce the latter to eliminate the infringed technology from their devices going forward.
Apple, on the other hand, is planning to file a petition against the court's recent decision. However, the unfavorable ruling is expected to have negligible impact on the Apple's product sales during the holiday season, in our view. Moreover, products like iPAD 3G and iPhone 4 will also be available during this Christmas in Germany.
Since 2007, Motorola Mobility is in talks with Apple for providing licensing terms. So, we believe that the company will not put an injunction on the sale of Apple's iPad 3G and iPhone 4 devices. However, if the company holds any such intention then it will have to post a $133 million bond, which in turn will mitigate the losses that Apple may incur if it is prevented from selling its products going forward.
Earlier, Google Inc. ( GOOG ) entered into an agreement to acquire Motorola Mobility for $12.5 billion, subject to regulatory approvals. Presently, Motorola Mobility holds rights for approximately 24000 patents, which Google is mainly eyeing. Moreover, the company uses Google's widely-used Android operating platform for their smartphones. Following the takeover, Google's Android platform will gain a significant edge over Apple in the smartphone space.
We, thus, maintain our long-term Neutral recommendation on Motorola Mobility Holdings Inc. Currently, Motorola Mobility Holdings Inc. has a Zacks#3 Rank, implying a short-term Hold rating on the stock.