Apple to Share HTC Settlement Terms

A U.S. federal judge has ordered Apple Inc. (AAPL) to produce the details of its settlement with HTC. This order will help Samsung determine if Apple’s claims for “irreparable harm” could be thwarted. This is apparently all it needs to prevent the injunction that could ban its devices in the country.

Very recently, Apple settled its long-standing patent dispute with the Taiwanese smartphone maker HTC. Both the companies dropped all charges against each other. The patent dispute between Apple and HTC dates back to 2010. Apple’s co-founder late Steve Jobs had sued HTC, the user of Google’s (GOOG) android operating system, for copying certain iPhone features. This initiated Apple’s fight against Google’s Android, which was gaining popularity.

Coming to the Apple-Samsung patent dispute in the U.S., the iPhone maker had gained a major advantage over its Korean counterpart by winning a $1.05 billion patent-infringement verdict in August this year. Now, U.S. District Judge Lucy H. Koh is supposed to preside over Apple’s claims to permanently ban Samsung smartphones and Galaxy 10.1 tablets from the U.S. market in the upcoming December hearing. The judge will also consider Samsung’s allegations of juror misconduct.

Apple representatives remain tight-lipped, which could be a wise strategy since a lot hangs on its ability to get that injunction. Alternatively, a licensing agreement between the two archrivals seems unlikely.

We believe that Apple remains the biggest growth story over the long term based on its superior product pipeline, Apps, iCloud and loyal customer base. Apple is also well positioned to gain from international expansion going forward. Moreover, the recent shareholder-friendly moves, such as dividend payment and share buyback, are expected to drive the stock going forward.

However, we believe that Samsung will continue to grab market share, particularly in developing countries such as China, based on its diversified product portfolio that caters to every income group. Apple’s ability to spur the popularity of its products in developing nations, where pricing is often an important consideration, will go a long way in deciding the company’s future growth.

Moreover, increasing product related costs and supply chain constraints may hurt profitability going forward.

Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term.

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