Samsung Elec tumbles 7pc after Apple’s legal victory
SEOUL, Aug 27 — Shares of Samsung Electronics Co tumbled more than 7 per cent today, as Apple Inc's sweeping legal victory over the South Korean firm raised concerns about its smartphone business – its biggest cash cow.
A U.S. jury found Samsung had copied critical features of the hugely popular iPhone and iPad and awarded Apple US$1.05 billion (RM3.1 billion) in damages in the most closely watched patent trial in years.
Shares in Samsung – the world's biggest technology firm by revenue – tumbled 7.5 per cent, its biggest daily percentage drop in nearly four years, to 1.183 million won (RM3,000), versus a 0.5 per cent drop in the broader market.
“An adjustment in the next few days is unavoidable as the damage amount was much bigger than market expectations, and there are further uncertainties such as the possibility of a sales ban,” said John Park, an analyst at Daishin Securities.
Analysts estimate Samsung's earnings will be reduced by 4 per cent this year due to increased patent-related provisioning.
The US jury in San Jose, California, found on Friday that Samsung infringed on six of seven Apple patents. The verdict, which came after less than three days of jury deliberations, could lead to an outright ban on sales of key Samsung products and will likely solidify Apple's dominance of the exploding mobile computing market.
Apple plans to file for a sales injunction against Samsung, its lawyers said, and the judge in the case set a Sept. 20 hearing on the proposed injunction.
Top executives at Samsung led by vice chairman Choi Gee-sung and head of its mobile division JK Shin held an emergency meeting yesterday.
But Samsung's skill as a “fast executioner” – quick to match others' innovations – would likely mean tweaked, non-patent infringing devices would be on the market soon after any ban came into place, analysts said.
“The ruling is a costly lesson for Samsung – but also an opportunity for a true alternative to Apple's well-known hardware with more innovative thinking and imaginative products ahead,” Morgan Stanley analysts said in a note.
“There are more ways to build a touch screen smartphone and thanks to its fast execution capability, Samsung could quickly work around design changes, upgrading models and introducing new technology such as flexible displays, Galaxy S III and Galaxy Note to differentiate its devices from Apple.” — Reuters