Samsung Electronics shares tumbled more than 7 percent on Monday, wiping $12
billion off the South Korean giant's market value, as Apple Inc's
sweeping legal victory in their U.S. patent battle raised concerns about
its smartphone business - its biggest cash cow.
A U.S. jury
found Samsung had copied critical features of the hugely popular iPhone
and iPad and awarded Apple $1.05 billion in damages in the most closely
watched patent trial in years.
Shares in Samsung - the world's
biggest technology firm by revenue - tumbled as much as 7.5 percent, its
biggest daily percentage drop in nearly four years, to 1.183 million
won, versus a 0.5 percent drop in the broader market.
Trading volume was heavy, more than doubling the last week's daily average by early Monday trade.
"An
adjustment in the next few days is unavoidable as the damage amount was
much bigger than market expectations, and there are further
uncertainties such as the possibility of a sales ban," said John Park,
an analyst at Daishin Securities.
Analysts estimate Samsung's earnings will be reduced by 4 percent this year due to increased patent-related provisioning.
The
jury at a federal court in San Jose, California, found on Friday that
Samsung infringed on six of seven Apple patents. The verdict, which came
after less than three days of jury deliberations, could lead to an
outright ban on sales of key Samsung products and will likely solidify
Apple's dominance of the exploding mobile computing market.
EYES ON GALAXY S III
Apple
plans to file for a sales injunction against Samsung, its lawyers said,
and the judge in the case set a hearing date for September 20.
Top
executives at Samsung, led by vice chairman Choi Gee-sung and head of
its mobile division JK Shin, held an emergency meeting on Sunday.
The
biggest concern for Samsung remains whether its latest flagship product
the Galaxy S III, which was not included in the case, will be also
targeted by Apple and included in the list of products banned in the
U.S. market. The model is Samsung's best selling smartphone, with sales
topping 10 million since its late May debut.
But Samsung's skill
as a "fast executioner" - quick to match others' innovations - would
likely mean tweaked, non-patent infringing devices would be on the
market soon after any ban came into place, analysts said.
"The
ruling is a costly lesson for Samsung - but also an opportunity for a
true alternative to Apple's well-known hardware with more innovative
thinking and imaginative products ahead," Morgan Stanley analysts said
in a note.
"There are more ways to build a touch screen
smartphone and thanks to its fast execution capability, Samsung could
quickly work around design changes, upgrading models and introducing new
technology such as flexible displays, Galaxy S III and Galaxy Note to
differentiate its devices from Apple."
Samsung was disappointed
by the verdict and plans to keep the legal fight to have its claims
accepted, according to internal memo sent to its employees, that was
seen by Reuters.
"We've sought to settle this through
negotiations, as Apple is our customer but had no choice but to counter
sue," the memo said. "There's no firm in history which has sustained
growth by trying to stifle competition with legal fights on patents,
rather than fairly compete with innovation in the market place."
Copyright Thomson Reuters 2012
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