Apple’s Legal Efforts to Halt Samsung Galaxy Sales Falls Short

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Apple (NASDAQ:AAPL) failed to convince the U.S. judge to block Samsung from selling Galaxy line of smartphones and tablets in the U.S., depriving the company of gaining a crucial advantage in the high stakes battle of the mobile devices market. [1] The legal battle between Apple and Samsung continues to intensify as both are looking to gain market share in the highly competitive mobile market. Samsung held its lead in the U.S. mobile subscriber market during the October quarter according to comScore. Even though Apple gained market share slightly to around 11%, it lags the 25% market share held by Samsung. [2] Motorola Mobility (NYSE:MMI) and Research in Motion (NASDAQ:RIMM) continued to lose share in the U.S. mobile market.

See our complete analysis for Apple stock here

Apple-Samsung battle continues

The intensifying turf war between these players continues. It all started in April this year when Apple sued Samsung claiming its Galaxy cellphones and tablet “slavishly” copied Apple’s iPhone and iPad. [3] However, this most recent victory is a big win for Samsung as it has comes in the wake of an Australian court’s ruling that Samsung was free to sell its Galaxy tablets in that territory. Samsung stock was up around 2% as the legal uncertainties between Apple and Samsung starts to diminish and partially clears an overhang for the Korean tech giant.

Samsung’s dramatic jump in the smartphone market

For Apple, the stakes in the smartphone market remains high as Samsung overtook Apple in the global smartphone market last quarter. [4] Samsung had a dramatic gain in the smartphone market and increased its share from a mere 9% in Q3 2010 to 24% in Q3 2011. Apple share actually declined from 17% to 15% during the same period given the explosion of smartphone devices. No wonder Apple is desperate to halt Samsung’s rapid rise, and one way to do this is to create legal obstacles for Samsung’s products. However, the court’s rejection to block Samsung’s smartphones in the U.S. is a blow to these efforts.

For Apple, iPhone is the most valuable product and accounts for more than 50% of our $500 price estimate for Apple stock. Our price estimate for Apple stock is about 30% above market price.

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  1. Samsung up after Apple’s bid to ban Galaxy rejected, Reuters, December 5th, 2011 []
  2. comScore Reports October 2011 U.S. Mobile Subscriber Market Share, December 2nd, 2011 []
  3. Apple: Samsung Copied Design, The Wall Street Journal, April 19th, 2011 []
  4. Strategy Analytics: Samsung Becomes World’s Number One Smartphone Vendor in Q3 2011, October 27th, 2011 []