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Apple And Samsung CEOs To Meet. Shouldn't Move The Stocks Long-term

Jan 9 2014, 1:56am CST | by , in News

Apple And Samsung CEOs To Meet. Shouldn't Move The Stocks Long-term
Photo Credit: Forbes
 
 

Reuters is reporting that title="Reuters article about Apple and Samsung CEOs meeting">Apple’s CEO Tim Cook and Samsung’s CEO Oh-Hyun Kwon have agreed to attend a mediation session on or before February 19 which is prior to a March trial date in the U.S. (Note that my family and I own Apple shares).

Over the past two years Apple and Samsung have been involved in a number of lawsuits. In what may be the largest one Apple initially was awarded $1.049 billion in August 2012 which was reduced to $598.9 million in March 2013 and then was awarded an additional $290 million in November making the total about $889 million.

Even a very large award will not move the stock

I believe there have been very few times that a legal case has had a materially positive affect on a stock price and those tend to be awards that are a significant percentage of a stocks market cap. In this case with Apple and Samsung having about a $490 billion and $165 billion market cap, respectively, and lots of cash on their balance sheets I don’t think almost any outcome will move the shares in the long-term and maybe even in the short-term.

Also most of the products that are under dispute are prior generations and don’t generate a significant percentage of Samsung’s sales or impact Apple’s products. Yes, Apple needs to sue otherwise Samsung and other companies would not pay attention to Apple’s intellectual property and could impact future sales but if the court decides that Samsung can not sell the products in the lawsuit it probably won’t change the competitive landscape especially since Samsung will have developed workarounds of Apple’s patents.

Apple seems to be staying above its 50 day moving average

For the past four days Apple’s shares have been testing its 50 day moving average of about $540. After large drops on Thursday and Friday last week the stock has been bouncing around but closing above its 50 day moving average each day.

Source: StockCharts.com

Apple announced that it would release its December quarter results after the close on Monday, January 27, so the shares could stay in a tight trading range unless one or more of its partners reports better or worse results than expected (Verizon reports before the market opens on Tuesday, January 21, while AT&T will report on Tuesday, January 28, after the market closes).

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

Source: Forbes

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