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A Mobile Phone "Falling Knife" Worth Catching?

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Apple’s prospects have gotten even shinier, thanks to its victory in its patent lawsuit against Samsung. That’s because other manufacturers are going to have to analyze the impact of the Aug. 24th verdict on their products, says David Garrity of GVA Research. “Clearly everyone's going to have to look at their plans, scratch their heads and do a little bit of a rethink to reset, and what that means for Apple (AAPL) clearly is an opportunity in terms of additional time in the marketplace to move their product forward,” Garrity tells Wall $treet Week. “At the end of the day, it equates to something maybe over 12 to 18 months, an additional five points to maybe 10 points of market share, which for Apple investors is not insignificant.”

The patent verdict, assuming it stands, clearly is bad news for Samsung, but it could also be bad news for other handset makers which, like Samsung, use the Android operating system. Android maker Google (GOOG), though, is unlikely to be affected since it doesn’t charge for its use, Garrity says. But there’s one surprising “falling knife” that investors may think about catching: Nokia (ADR: NOK). That’s because Microsoft (MSFT), which has cross-licensing agreements with Apple, is rolling out its Windows Phone 8 with a Nokia smartphone this month. “We think that Nokia is one smartphone vendor that actually may be able to benefit from this pause, or hiatus, that you might see on the part of competitors following this patent decision,” Garrity says.

In his interview with Wall $treet Week’s Jeff Salkin, Garrity also revisits two successful small-cap picks from his last interview in January. He continues to like the two companies in the machine-to-machine and remote monitoring markets. More on that at wallstreetweek.com.