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Apple seen showing signs of softening on war with Samsung

Publication Date : 14-02-2013

 

The complicated high-profile patent war between Samsung and Apple, the world’s leading electronics makers, may have turned a corner, at least for the Korean company.

The most recent news on the issue is that Apple’s chief executive Tim Cook, who succeeded the iconic Steve Jobs, had been opposed to suing Samsung in the first place, according to reports citing people with knowledge of the matter.

The main reason was because of the key role that Samsung plays as a major supplier of components for the iPhone and the iPad manufactured by Apple.

Analysts are currently estimating that Apple purchased some US$8 billion worth of parts from Samsung, making the two inseparable partners in business. Since then, Apple has been seeking to diversify its suppliers.

Industry sources on Wednesday said the reports indicate that Cook may now want to depart from the lengthy suit with Samsung, and is seeking to mend fences.

“That we are hearing these reports is quite significant because of the timing, not to mention that the fact that the Apple CEO has mentioned he never wanted to start a battle with Samsung in the first place is also surprising,” said one source close to the matter who declined to be identified.

Timing, he stressed, is significant since the US District Judge Lucy Koh, who is in charge of the case and preparing to issue another post-trial ruling, has recently ruled that Samsung had not “willfully” infringed Apple’s patents.

“Whether Samsung had an intent to copy Apple’s designs is likely to have a big impact on the final ruling, especially in terms of the damages that Samsung was ordered to pay to Apple,” said one legal source who wished to remain anonymous.

Samsung has asked Koh to reduce the award to Apple by as much as $600 million, down from the $1.05 billion handed down by a US jury in August last year. The jury found Samsung to have “willfully” infringed on Apple’s smartphone design.

Another reason Cook may be seriously considering a deal with its Korean rival is due to a slew of woes Apple is facing in the equity markets and with an activist shareholder.

Apple stocks last month tumbled more than 30 per cent from its peak in September. The issues are now trading below $500.

While Apple was tanking out, Samsung became largely successful in its attempts to match or even overwhelm the US company in the smartphone and tablet markets.

On top of these troubles, Cook is now faced with a lawsuit which he may find as “silly” and “creative”, but is being plastered all over the internet nevertheless.

The suit involves none other than David Einhorn, a hedge fund manager, whose company Greenlight Capital filed a suit against Apple, demanding it to share more of its $137 million cash pile with investors.

This will not be the first time Apple has been in trouble with the public for failing to share its profits.

In March last year, Apple had - on mounting pressure and criticism - announced a quarterly cash dividend and share buyback to pay out $45 billion to investors over a period of three years. At the time, Apple had been hoarding $98 billion in cash.

Apple’s logic is that it needs the cash for strategic flexibility that would be required for major strategic decisions, such as an acquisition.

Cook has so far said Apple has yet to find such a partner, despite having mulled over many a potential company to acquire.

Samsung, meanwhile, remains silent on whether it is ready to sit down with Apple to discuss a joint exit strategy, saying it sticks to its original statement, which was that it would never settle outside the court.

The upcoming ruling in the US is likely to be another watershed moment for both companies, especially since Samsung is placing much emphasis on the legal outcome at the home of Apple.

The judge has so far shot down a new trial despite Samsung’s requests.

 

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