Apple’s Verdict Win Could Result In A “Royalty Revenue Stream”
With the Apple vs. Samsung case coming to a brutal end for Samsung this past Friday, what’s to come next? Apple’s stocks have already soared above and beyond $680 this morning, hitting a new all-time high. While all is good for Apple, Samsung is suffering as their market value plummeted 12 billion due to the loss.
So strictly based off the court verdict Friday evening, some Wall Street analysts have predictions on the future of Google/Android and Apple. Let’s start off with Apple’s future, based on UBS’s thoughts:
If Apple is successful in its patent cases to conclusion (appellate, district, Supreme courts, and U.S. President) and if it is willing to settle, we believe it could result in a royalty revenue stream–Apple calculated Samsung owed it $250MM in 2010 (on an estimated 25MM smartphones and 2MM tablets), assuming certain discounts. We think this amount would be higher in 2012 at that rate with Samsung having sold an estimated 50MM smartphones in Q2 alone (hence, even a lower rate could result in a royalty greater than $250MM/yr). We est[imate] that every $250MM in royalty revenue equates to roughly $0.20 in EPS, all else equal.
In easier to interpret terms, Apple may receive what is labeled a “royalty revenue stream” from Samsung. All the smartphones they’ve sold on the market that infringe Apple’s patents, Samsung will owe a set royalty rate.
Now, Barclays talks the impact on Android:
While the verdict is not a positive for Google and the broader Android ecosystem, we believe this event alone will have a minimal near-term impact on Android’s global momentum in the smartphone arena. However, we admit that a potential sales injunction against Samsung products could impact Android’s strength in the U.S. Although $1.05 billion in damages is a large sum, most of Samsung’s devices that were found to infringe upon Apple’s patents are older models, and, importantly, in our view, Samsung’s current flagship phone, the Galaxy S III, was not included.
With all of Samsung’s phones running on the Android operating system, I would’ve thought Android would be left some side effects from the court decision. Since most phones caught infringing Apple’s patents were older models, sales should continue to ascend for Samsung, in turn means more Android-powered phones.