South Korean models display LG's new smartphone 'Optimus G' equipped with quadcore chipset during a... [+]
Another day, another legal verdict on smartphone wars.
According to Reuters, a U.S. appeals court reversed a preliminary injunction banning the sale of Samsung Electronics Co Ltd's Galaxy Nexus smartphone, sending the case back to a California court for another review. This means that the major battle for smartphone sales in the US will be fought in the marketplace, not in courts.
That’s where it should be fought anyway. The consumer, not a judge, will determine which company has a better product, as is the case with many high technology products.
While this may be bad news for Apple (NASDAQ:AAPL in the short-term (the stock sold off after the news), it is good news in the long-term. It will compel the company to spend more time in the lab room than in the courtroom, continuing its innovative tradition set up by Steve Jobs.
What should investors do?
As I did discuss in previous pieces, active investors should learn how to distinguish between the news message and the noise. The news that carries the message is the company’s economic fundamentals, which remain intact. Apple is trading at a forward (Sept 2013) PE of 12.52, below Google’s forward PE of 15.30 (Dec 31, 2013).
| Company | Apple | |
| Forward PE | 12.52* | 15.30 |
| Operating Margin | 35.62 % | 30.76% |
| Qtrly Revenue Growth (yoy) | 22.60% | 35.30% |
| Qtrly Earnings Growth (yoy) | 20.70% | 11.20% |
*Fye Sep 24, 2013
+Fye Dec 31, 2013
Source: Yahoo.Finance.com
Active investors should further learn to focus on the next war, because markets have already determined the fate of the previous war.
And the next war isn’t about the 6th, the 7th, the nth version of the iPhone and the iPad, but the next iProduct on the pipeline that will change the lives of consumers.
Does Apple, Samsung, Google (NASDAQ:GOOG, Microsoft (NASDAQ:MSFT)or another technology company hve such a product? It remains to be seen. In the meantime let markets ring! Competition is good for Apple, good for Samsung and Google, and above all, it is good for the consumer, the ultimate judge of every product.
