Apple lost the International Trade Commission ruling this week in favor of Samsung, and the court decided that sales of iPad 2 and iPhone 4 have to be suspended in the U.S territory. However, as the market watchers suggest, these legacy products are already old, and people will not hurry to purchase such devices.
In this respect, the Fruit Company will encounter a minimal financial impact. The sales ban could affect Apple only by 1 percent over the next two quarters. However, the movement will have no lasting impact upon the company’s financial expectations.
Tuesday’s ruling in favor of Samsung found Apple guilty of infringing on certain Samsung cellular technology patents. Such a ban will decrease the sales of the AT&T models of iPhone 4 and 3GS and the 3G versions of the first and second iPad.
These two devices were found by the ITC to have violated the Samsung patent called “Apparatus and method for encoding/decoding transport format combination indicator in CDMA mobile communication system”, better known as the standard essential UMTS wireless technology.
Considering the contribution of iPhone 4 upon Apple’s revenue, the company will not suffer after having these two devices banned from the United States. After all, iPhone 4 brought only 8 percent to the total revenue over the last two quarters. Moreover, sales of the device thought AT&T carrier contributed even less, more precisely with only 2 percent of the total revenue.
One percent loss in Apple’s revenue for the next two quarters means $680 million. However, these numbers are only hypothetical because when customers will want to buy an iPhone 4, they would go with another model. Instead, customers might be guided in purchasing an upgraded iOS device such as an iPhone 4S or even iPhone 5.
Despite these statistics, Apple is entitled to appeal the decision to the Federal Circuit and ask for a reprieve from the White House, which has the power to approve or disapprove the ruling.
On the other hand, if the ban will prevent Apple from selling 1.5 million iPhone 4 units, this will affect the company’s quarter earnings per share by 24 cents, or 3 percent of the Um’s current $7.46 estimate.
As a result of the current iPhone 4 ban while considering the future iPhone upgrade, analyst Gene Munster of Piper Haffray said that Apple is likely to withdraw the iPhone 4 in September, when Apple is expected to release the next-generation of iPhone. At this time, Apple is offering the last two generations of iPhone at a discount in order to get to other type of customers.