The Dutch Side with Apple
Apple Inc. (AAPL) and Samsung Electronics’ patent infringement battle stretches across various countries, with the latest focus shifting to the Dutch Republic.
Apple seemed to have scored a win this time, as The Hague District Court, Netherlands, has ruled in favor of the iPhone and iPad maker. Samsung had appealed for a ban on iPad and iPhones in the country, citing violation of a certain 3G wireless patent, according to Reuters.
Justifying its latest ruling, the court cited that Apple uses QUALCOMM Inc. (QCOM) baseband chips, which already has a licensing agreement with Samsung, thus ruling out Samsung’s accusation of its 3G patent infringement.
Amidst the bickering between Apple and Samsung, industry sources reveal that the former has sought Samsung’s touch-screen panels for its latest iPad. Though both the companies continue to fight tooth and nail for dominance in the tablet and smartphone markets, their business ties appear to be just as strong. For Apple, this makes perfect sense, given that supply constraints have always been more of a problem for it than weak demand.
Apple has also been pretty aggressive in protecting its intellectual property and has been using court rooms to counter competition in various countries. Except for a few failures, the company has seen success in many of the patent litigation cases that it has filed against Samsung and other fellow competitors such as HTC, Motorola Mobility Holdings Inc. (:MMI) 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 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 iCloud and iPhone 4S, and the “new 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 have an Outperform recommendation on Apple over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.
Read the Full Research Report on AAPL
Read the Full Research Report on MSFT
Read the Full Research Report on MMI
Read the Full Research Report on QCOM
More From Zacks.com
