Samsung up after Apple's bid to ban Galaxy rejected

SEOUL Mon Dec 5, 2011 10:02am EST

Foreign visitors look around at a showroom displaying Samsung Electronics' products at the company's headquarters in Seoul July 7, 2010. REUTERS/Truth Leem

Foreign visitors look around at a showroom displaying Samsung Electronics' products at the company's headquarters in Seoul July 7, 2010.

Credit: Reuters/Truth Leem

SEOUL (Reuters) - Shares in Samsung Electronics Co Ltd rose more than 2 percent on Monday after Apple Inc's bid to halt U.S. sales of its Galaxy line of products was rejected, easing concern of slowing growth in its telecom business, which generates revenue of $13 billion per quarter.

The U.S. court ruling deprived the iPhone and iPad maker of crucial leverage in a global patent battle between the two companies, and paved the way for Samsung to sustain its strong smarpthone sales momentum.

The two companies are locked in a bruising legal battle that includes more than 20 cases in 10 countries, but none of them carries more significance than the U.S. case, as it is the most important market for Samsung.

Samsung surpassed Apple as the world's top smartphone maker in the third quarter and a ruling to temporarily halt U.S. sales of Galaxy smartphones could have negatively affected its growth momentum just as Apple released the iPhone 4S in early October.

"We believe the legal uncertainties between Samsung and Apple are waning, or put in another way, the situation is turning positive for Samsung," said Nomura analyst CW Chung.

Morgan Stanley analysts said the ruling removed the worst-case scenario for Samsung's operating profit of a hit of as much as $1.5 billion and was "clearly a major and favorable event" for the company.

Samsung reported a record 2.5 trillion won ($2.2 billion) operating profit at its telecommunications business for the third quarter, aided by healthy sales of its flagship Galaxy line of smartphones. It has forecast better handset results for the current quarter.


Apple first sued Samsung in the United States in April, saying the company's smartphones and tablets slavishly copied its iPhone and iPad.

Samsung shot back, suing Apple for infringing on its telecommunications technology.

"It's not all bad for Apple, with a view to the final decision on those intellectual property rights that will come down at the end of the main proceeding," said Florian Mueller, an independent intellectual property expert. "It's possible that Apple will get a more favorable outcome on some of the asserted rights in the main proceeding."

The two will go to trial in the United States on July 30 next year.

Apple could still prevail in the overall lawsuit, but its inability to win a quick halt to Galaxy sales in the United States comes as the stakes skyrocket in one of the fastest growing electronics markets.

Samsung has moved quickly to avoid alleged patent infringements by releasing tweaked tablets and smartphones in Germany and the Netherlands.

"Accounting for the recent results of lawsuits, we see Apple's design patents are either not regarded as legally protectable or are easily circumvented by competitors," said Chung at Nomura.

Shares in Samsung, Asia's most valuable technology company, were up 1.7 percent by 11:08 EST after climbing as high as 2.2 percent in a flat market.

The stock hit a record high of 1.08 million won last week, partly helped by expectations of solid performance of the company's smartphone and chip business in the fourth quarter.

(Editing by Chris Lewis)

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Comments (6)
cmac2573 wrote:
Well this is good news. Competition between the two will do nothing but benefit consumers and new technology

Dec 04, 2011 8:21pm EST  --  Report as abuse
WeWereWallSt wrote:
We agree with CMAC. If you’ve read Isaacson’s bio of Jobs, you know what a control freak the guy was and how he hated anyone doing anything like what Apple was doing. He accused Gates and MSFT of stealing the idea for Windows from Apple. As Gates told him, it was like we (MSFT) showed up at Xerox’s house to rob it and you guys had already walked off with the TV. Scientists at Xerox’s Palo Alto Research Center were the inventors of GUIs and the mouse.

Onward and upward for the consumer.

Dec 05, 2011 11:29am EST  --  Report as abuse
Stanley7746 wrote:
My guess is that all corporations are control freaks. No one works at Microsoft who has a friend who speaks ill of Gates.

Dec 05, 2011 1:24pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

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