Samsung, with a market cap around $170B, shed around 7% or $12B in market value due to declining stock price on the hype of the Apple win by Jury recommendation last Friday in the case Apple vs. Samsung, defending patents and intellectual property. Look to the right and you can see the shock and awe that is Samsung on the Korea Stock Exchange.
Samsung trades at extremely good valuations, between 10 and 15 percent earnings, meaning it’s core company is completely solid. But with the onset of mobile success over the past three years, Samsung has bolstered to be a serious contender with Apple. And Apple is not a company that you want to compete against and walk away scratch free. All of it’s growth has been hard fought and tactfully pried for to become the most valuable company in the world. Apple is a company built on patents, creating, and protecting property and with it’s blanket slated patents on just about anything that can be approved, Apple has successfully set themselves up to win over the jury over who sent a recommendation of a $1B pay out to be determined by Judge Lucy Koh.
Remember, that this is not a verdict, rather a recommendation to the Judge. $1B payout and potential sales loss is a serious chunk of Samsung as a company. It could be argued as much as 2% of it’s $170M market cap and no company is going to let that much get away without a fight. Samsung’s next step is to obviously appeal, not only to Judge Lucy Koh, but if failed, also take the appeal to the U.S. Court of Appeals for the Federal Circuit. This is a specialized court that focuses on patents (and which is also known for 50% changes in verdicts). This process will tie up the case in a mess that could take up to a year to a year and a half.
Which means, “grid-lock heaven” for Samsung. Hold it up in court as long as possible. There is still much more to come for the story between Apple and Samsung. Samsung being at fault for copying Apple; or Apple blanketiering patent law, more to come…