A 1-Day Snapshot Of Firms Related To The Apple-Samsung Electronics Case

by: John Eastman

Last Friday Apple (NASDAQ:AAPL) was awarded $1.05 billion in damages by a U.S. jury against Samsung Corp. (OTC:SSNLF), saying it had copied critical features of the iPhone and iPad. The verdict could lead to an outright ban on sales of key Samsung products.

What happened over the course of one day - the following Monday - is albeit a small snapshot of news and market performance, but may be a good indication of a longer-term outcome of the effects of the trial verdict.

Apple stock closed to a new high of $675.68 (up 1.9%) after the verdict. The company wasted no time in pursuing immediate bans on the sale of eight Samsung Electronics phones. Apple's lawsuit encompassed 28 devices in total. The Galaxy S III phone was not included in the 28 devices, but the ruling was so complete in upholding Apple's patents that a ban directly on the S III is not expected to be problematic or a lengthy process for Apple to achieve in court. An injunction hearing has been set for September 20. Expect a smartphone market share increase in favor of Apple within months and affirmable by the end of the fourth quarter. Their stock seemingly has nowhere to go but up, with analysts capable of seeing a $1,000 share mark within 12 months.

Samsung Electronics stock nosedived 7.45 percent (U.S. $1,039.65 ) on news of the verdict. The September 20 injunction hearing could cause another severe drop, perhaps as much as 25%. According to media sources, two-thirds of the global market products - including phones that use the Google Android - may be forced to consider design changes. Apple is not expected to let up on protecting its patents and will be very diligent in watching every single product release of its competitors, especially Samsung. Furthermore, smartphone manufacturers, including Samsung, may be slowed down quite a bit and see profit margins shrink, as more expense associated with research and development and longer development time is expected.

Essentially, the Apple ruling will force Samsung and other manufacturers to be more inventive, and this requires more time and money to do so.

Google (NASDAQ:GOOG) and the hardware manufacturers with which it partners making smartphones that use the firms Android operating system), could possibly be neutralized a bit, as hardware units may need to be redesigned. Again, this is not something that happens overnight. More R&D costs, more time to come to market could be the outcome. Google shares closed 1.4 percent lower at $669.22.

Microsoft Corp, (NASDAQ:MSFT) clearly benefits if smartphone makers seek out Android alternatives. They closed up 0.4 percent at $30.69. Why would this happen? Manufacturers using the Android platform would want to avoid a similar legal battle with Apple. With a victory under their belt, and approximately $120 billion of cash on hand, Apple could battle for years and put a few severe dents in a hardware manufacturer's bottom line with an injunction, a win, or monetary settlement.

Nokia (NYSE:NOK), which has taken the Y in the road towards Microsoft's camp and Windows-based phones, gained 7.7 percent and closed at $3.25. This fall, the company is expected to launch its Windows Phone 8 devices, and a holding pattern inflicted upon Samsung should provide Nokia with a large window of opportunity for market share gain.

Research in Motion (RIMM) far distanced, it seems, from the patent litigation issue with Apple, experienced a bounce of 2 percent to $7.07. RIM has had one disaster after another with network outages, delayed product introductions, and significant market share loss to Apple and Google in the smartphone market.

Essentially the Apple win provided a one day, short-term bounce for firms in the mobile industry. But that bounce could become a long roll consisting of greater share prices, increased market share and profits, if Apple is successful in its injunction efforts against Samsung. There most likely will not be one single beneficiary, but a smattering of them in small doses, perhaps indicated by Monday's news and closing share prices. Samsung, Google, and Google's Motorola Mobile Unit are clearly not standing by idly in wait-and-see mode. Their Plan B is most likely well in motion by now.

As a last note, Samsung said it would seek to overturn or appeal the decision.

Disclosure: This article was also published on The Chairman's Blog publication. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.