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December 6, 2011

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US court ruling lifts Samsung

SHARES in Samsung Electronics Co Ltd rose more than 2 percent yesterday after Apple Inc's bid to halt United States sales of its Galaxy line of products was rejected, easing concern of slowing growth in its telecom business, which generates revenue of US$13 billion per quarter.

The US 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 US 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 US 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 C.W. Chung.

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

Samsung reported a record 2.5 trillion won (US$2.2 billion) operating profit at its telecom business for the third quarter, aided by healthy sales of its flagship Galaxy line of smartphones.

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