South Korea’s Samsung sought Monday to rally employees after a $1.05 billion US court judgment in favor of arch-rival Apple pushed its shares sharply lower amid fears about the fallout in the key American market.
Samsung shares tumbled 7.5 percent, the biggest single-day percentage drop the electronics giant has seen in nearly four years, after a California jury last week said the firm had infringed on half a dozen patents held by Apple.
Shares of other Asian smartphone makers which run Google’s Android operating system, the partial target of Apple’s lawsuit, were also lower.
Analysts said the fine was not a major issue for Samsung, the world’s biggest technology firm, but the jury verdict raised concerns about a possible ban on some US sales when the judge in the case makes her final ruling. This was expected on September 20 but could be delayed.
The jury in San Jose, California decided Friday that Samsung “wilfully” infringed six Apple patents for smartphones or tablet PCs.
Samsung, in a blog message to staffers, said it was “very disappointed” at the ruling — part of a legal battle in nine countries between the two technology titans.
But the company, which has announced it would contest the verdict, said it would “continue to do our utmost until our arguments have been accepted.”
Samsung said courts in the United Kingdom, the Netherlands, Germany and Korea had previously ruled it had not copied Apple’s designs. Without naming its US rival, it decried the “outright abuse” of patent law.
“We trust that the consumers and the market will side with those who prioritise innovation over litigation, and we will prove this beyond doubt.”
Analysts said the judge could later decide to triple the damages because jurors found Samsung acted “wilfully”, and order a partial product ban.
If the ruling leads to a US sales ban on the Samsung products subject to dispute, said Hi Investment and Securities analyst Song Myung-Sup, it will start eroding the company’s revenue from the fourth quarter.
Some analysts said the key point would be whether the patents battle spreads to Samsung’s flagship Galaxy SIII phone.
The products ruled to have infringed Apple’s patents are all older models. The jury did not make any recommendation about banning their future sale.
“Samsung’s profit is expected to reach 7.5 trillion won during the third quarter. One trillion won (about one billion dollars) is not a problem for Samsung,” said James Song of Daewoo Securities.
Song said the share plunge partly reflected fears that the popular Galaxy products would be banned from the US, and concern that the SIII and subsequent models could also be subject to litigation.
However, considering the design changes and other modifications, “it’s unlikely that anyone will confuse the Galaxy series with the iPhone from now on.”
Despite the strong reaction by stock market investors, Song said most of the models subject to a possible ban were not widely sold any more.
“I’m guessing about five percent or two million gadgets will be banned,” he told AFP.
Daishin Securities analyst Jeff Kang said the US verdict would have no immediate impact on the worldwide operations of Samsung, which had an estimated 20 trillion won in cash reserves.
But US operations would be affected.
While the legal battle would continue, “Samsung could also opt to do business after paying royalties or unveil new models to avoid further suits.”
Dow Jones Newswires contributed to this report
[Image via Agence France-Presse]