With the recent legal defeat that Samsung suffered at the hands of Apple, many investors have been worried that this may affect Samsung profits in the years to come. One possible outcome of this decision would be Samsung agreeing to pay a license royalty on every device they make that uses an Apple patent. This could be anywhere between $5-$20 per device. Sound like a lot right? It is, but consider this; The verdict reached in U.S Federal Court, is just that, U.S centric. Should Samsung have to pay Apple license royalties, it would most likely only apply to shipments in the United States. Samsung is expected to ship about 30 million units in 2012 in the United States, which comes out to around 15% of total shipments world-wide.
According to MarketWatch, Nomura, an analyst group, has said that these payments would amount to only about 3% of Samsung’s annual operating profits when it comes to smartphones.
In Samsung’s statement after the trial, they said “It will lead to fewer choices, less innovation, and potentially higher prices.” There it is right in the end. Should Samsung actually begin to see a drop in profits as a direct result of royalties, payments made to Apple, or loss of investors, prices will go up, and the profits will be regained in the long-term.
Samsung shows no signs of letting up, and will likely be going to an appeals court soon to fight the jury’s decision in the patent infringement trial. Samsung stocks tumbled over 7% in Asian markets, so now may be a good time to buy. Samsung is sure to not let this latest defeat break down their long-term plan. Let it not be forgotten that Samsung still makes some of the most successful handsets on the market for the Android OS, which holds 68% of the market as of Q2.
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