Apple and Samsung are currently involved in patent infringement lawsuits and countersuits across the globe. While their courtroom antics in the U.S. continue to grab eyeballs, today, we saw a Seoul Court in South Korea rule on Apple and Samsung’s lawsuits against each other.
The South Korean Court ruled that both Apple and Samsung violated each others patents. While Samsung infringed one Apple patent related to the bounce-back scrolling feature, Apple was ruled to have infringed on two of Samsung’s mobile data transfer patents.
This ruling will lead to a ban on some of Apple’s and Samsung’s products in South Korea. While Apple will have to stop selling the iPhone 3GS, iPhone 4, iPad 1 and iPad 2, Samsung will have to stop selling 12 devices including the Galaxy S, Galaxy S II and the Galaxy Tab. None of the newer devices by both giants will be impacted, as they were released after the lawsuit was filed. Apple must pay Samsung 40 million won, while Samsung must pay Apple 25 million won.
These amounts are a drop in the ocean when it comes to Apple’s or Samsung’s overall sales.
While this decision does not in any way indicate which way the U.S. court’s decision will move, it does show that this war will end with several casualties, especially since the U.S. market is a much bigger one for both parties involved.
Salesforce.com has announced its earnings for the second quarter of 2012 (Q2 FY13). It reported total revenue of $732 million, up 34% year-over-year, with subscription and support revenue growing to $687 million and professional services revenue increasing to $44 million. While the sales growth is impressive, it posted a net loss of $9.8 million, as sales and marketing expenses continued to balloon. Its deferred revenue grew faster than revenue, increasing 43% to $1.34 billion.
Its cash and cash equivalents stood at exactly $1 billion, while its short term marketable securities declined to $107 million by the end of the quarter. Its operating cash flow this quarter was around $136 million.
Salesforce.com’s Chairman and CEO, Marc Benioff said:
“Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency. Salesforce.com’s social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways – and it’s creating new opportunities for their growth and ours.”
It has raised its earnings outlook for the next quarter and the full year, but its stock is down nearly 5% as profits continue to elude the leader in the enterprise cloud software market.
via Salesforce – SEC
Facebook acquired Instagram months ago, but the deal was still pending regulatory approval, given potential antitrust issues. The Federal Trade Commission approved the deal today after reviewing it.
Facebook acquired Instagram right before its IPO for $300 million in cash and around $814 billion in stock, based on its IPO price of around $38. Now that its stock has cratered to nearly $19, the acquisition value is down to around $750 million, which is much lower.
Reasons by the Federal Trade Commission and the UK Office of Fair Trading for approving the acquisition included that fact that there was significant competition in the mobile photo sharing space, and that it didn’t generate any revenue. They also stated that Google’s ad business would offer tough competition to Facebook in the online ad space.
Facebook’s official statement on the FTC approval says:
“We are pleased that the Federal Trade Commission has cleared the transaction after its careful and thorough review.”
Instagram was probably one of its best acquisitions to date, and gives it a staggering lead in the mobile photo sharing space as well as access to more than 80 million users.
Dell reported its earnings for Q2 FY13 today, with revenue declining 8% to around $14.5 billion and operating income dropping 21% to $0.9 billion. While its services revenue increased marginally, revenue from products declined nearly 10%. In the products business, storage, mobility and desktop devices saw the greatest decline in revenue.
It reported a net profit of $732 million, down 18% year-over-year, as sales declined and R&D expenses jumped nearly 27%.
Michael Dell, Chairman and CEO, said:
“We’re transforming our business, not for a quarter or a fiscal year, but to deliver differentiated customer value for the long term. We’re clear on our strategy and we’re building a leading portfolio of solutions to help our customers achieve their goals.”
Dell’s stock has dropped nearly 5% following the earnings release, as it also lowered its outlook for the coming quarters, and is currently trading near its 52-week low.
As the desktop market is expected to see a decline in growth in the coming years, Dell’s earnings will continue to be hit since desktop products account for a major portion of its overall sales. The launch of Windows 8 might offer some respite, but Dell’s earnings will be pressured not only by increasing competition in the desktop space, but also by the shift to mobile devices where it hardly has a significant presence.
via Dell – SEC
Apple’s stock has been rising steadily over the last couple of weeks ever since rumors of the iPad Mini started increasing in frequency. Apple is expected to launch the next iPhone — the iPhone 5 — and a cheaper version of the iPad – the iPad Mini — at an event on September 12. As the date gets closer, we expect Apple’s stock to continue at all-time high levels.
The iPhone 4S had excellent sales despite being only a marginal improvement over the iPhone 4. Compared to that, the iPhone 5 is expected to be a major upgrade.
Apple may also unveil a new iPod, as well as the Apple TV. If that does happen, Q4 2012 could end up being Apple’s biggest quarter yet with sales driven by 4 major product lines.
Apple currently has a market cap of around $615 billion, with its stock trading at nearly $660. Its P/E multiple is around 15 right now. However, given the kind of growth it has shown in the last couple of quarters, its PEG ratio would actually imply that it is undervalued, assuming it can maintain its recent growth rate. If it does launch these new products, I find it hard to argue that it wouldn’t.
via Apple – Google Finance
HTC has been in the news for the past couple of days primarily because of 2 reasons. It has announced that it is investing $35.4 million in Magnet Systems, an enterprise apps startup, for a 17.1% stake, valuing the company at nearly $208 million. HTC seems to be focusing on the enterprise for now, to compensate for its declining clout in the consumer smartphone space.
“The investment will bring social, mobile, and cloud capabilities to HTC’s portfolio of service offerings to its mobile enterprise customers. The leading-edge social, mobile and cloud technologies at the heart of Magnet’s platform make it an ideal foundation for the applications and services that enterprises will be buying and building in the coming years,” said HTC.
Like Apple, even HTC is looking to grab a slice of the enterprise mobility pie, which is relatively less developed than its consumer counterpart.
The other reason why HTC’s in the news is OnLive. The cloud based gaming startup has undergone some significant restructuring and because of its investment in the company, HTC will be reporting a $40 million writedown this quarter.
HTC recently lowered its stake in Beats Audio, and has been making some significant moves to become one of the top smartphone device makers again. It was one of the earliest Android adopters, but has since been superseded by Samsung.
Also check out: What’s Wrong with HTC?
As the launch date for the Microsoft Surface nears, speculation about the tablet, including its pricing and production has started. IDC has kicked off the race to guess the pricing and estimated production volumes. It expects Microsoft to build more than 3 million units of the Surface tablet in the initial run. It also thinks that Microsoft may launch a $199 version of the Surface RT tablet with a two year subscription, as well as a $599 version which can be bought outright.
The hypothetical $199 variant would come with a subscription bundle combining Microsoft’s Office, Music and Video offerings.
However, pricing the Surface at such a low price point might anger its other device partners who would have to price their products much higher to not lose money on device sales.
We’ll see more details about the Microsoft Surface in October, when it is launched along with Windows 8. While the device is really impressive, Microsoft may be too late to the party. However, if Microsoft is able to price the Surface RT tablet below the iPad and closer to the Google Nexus tablet, it might be able to wrest some tablet market share out of Google’s and Apple’s hands.
Also check out: The $199 Surface and Windows 8 RT OEMs
Google seems to be making good use of Motorola’s patent portfolio in its war against Apple. This week, it filed yet another lawsuit against Apple claiming patent infringement for features like Siri.
The new complaint by Motorola involves seven Motorola patents related to features like location reminders, email notifications, video playback etc. If Motorola wins this bout, we could see a ban on U.S. imports of the iPhone, iPad and the Mac from Asia.
Motorola has stated that it is willing to work out a licensing deal with Apple. Apple is also involved in a mega-lawsuit with Samsung, the top Android device manufacturer, which it seems likely to win.
Besides Google and Apple, Microsoft is the other major player in the patent wars, and it is already making a ton of money from Android patent licensing. We expect these patent battles between Apple and Google’s numerous allies to be drawn out over the next couple of years.
Kodak’s patent auction promised to be one of the most exciting turning points in the ongoing patent wars, with its digital imaging patents touted to be worth billions of dollars. Kodak had put up more than 1,100 patents up for sale, with most of them related to digital imaging and image capture, processing and transmission technologies for digital cameras and smartphones.
We also saw prominent tech giants teaming up with each other to buy the patents, with the likes of Google, Samsung and RPX in one camp, and Apple, Microsoft and Intellectual Ventures in the other.
However, as the bidding progresses, it seems that Kodak may not be able to fetch what it expected to in the auction. Kodak had previously stated that the patents might be worth around $2.2 to $2.6 billion, but the current bidding rate is around $500 million.
Kodak has announced that it might decline to sell some or all of its patents if the bidding fails to push the prices up. It has already pushed the patent auction deadline twice, and may do it again to drum up interest in the auction and fetch a higher price.
Even if the auction does go through, there is no guarantee that it will be cleared by regulatory authorities due to possible antitrust issues.
Kodak filed for bankruptcy months ago, and owes nearly $1.4 billion to Citigroup and other bondholders.
Facebook’s stock continued to take a massive beating today as the first stage of the lockup period ended, freeing insiders to sell around 270 million shares on the open market. It has been exactly 3 months since Facebook went public, and this is just the beginning of the end of the lockup period.
The added liquidity following the expiration of the lockup period usually leads to selling pressure, which leads to a drop in a stock’s price, despite the fact that it is already public knowledge.
Close to 1.8 billion shares of Facebook are expected to be added to its free float in the coming months. That would almost double its outstanding share count, which combined with the speculation surrounding whether or not Facebook can successfully monetize its rapidly growing mobile audience, could easily lead to a further massive dip in its already underwater stock price.
Facebook is trading at around $19 today, which is nearly half of what it went public at.
At this valuation, most of its late stage investors like Goldman and possibly DST have incurred losses, and most of the public investors which invested in its IPO have already seen the value of their investment dip around 50%.
The only impetus that Facebook’s could possibly get would be during its next quarterly earnings, if at all it figures out its mobile monetization dilemma.